Exhibit 2.1
ASSET PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 7, 2000
AMONG
XXXXXXXXXX.XXX, INC.,
BEACON HOME DIRECT, INC.,
STREAMLINE MID-ATLANTIC, INC.
AND
PEAPOD, INC.
ARTICLE I
DEFINITIONS AND INTERPRETATIONS...................................................................................1
1.1. Definitions.....................................................................................1
1.2. Interpretation..................................................................................7
ARTICLE II
PURCHASE AND SALE.................................................................................................8
2.1. Purchased Assets................................................................................8
2.2. Excluded Assets.................................................................................9
2.3. Assumed Liabilities............................................................................10
2.4. Excluded Liabilities...........................................................................10
ARTICLE III
PURCHASE PRICE...................................................................................................12
3.1. Purchase Price.................................................................................12
3.2. Indemnity Escrow...............................................................................12
3.3. Creditor Escrow................................................................................12
3.4. Allocation of Purchase Price...................................................................14
ARTICLE IV
CLOSING..........................................................................................................14
4.1. Closing Date...................................................................................14
4.2. Payment on the Closing Date....................................................................15
4.3. Buyer's Additional Deliveries..................................................................15
4.4. Sellers' Deliveries............................................................................15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER.........................................................................17
5.1. Organization of Sellers........................................................................17
5.2. Subsidiaries and Investments...................................................................17
5.3. Authority of Sellers...........................................................................17
5.4. Financial Statements...........................................................................18
5.5. Operations Since Balance Sheet Date............................................................19
5.6. No Undisclosed Liabilities.....................................................................20
5.7. Taxes..........................................................................................20
5.8. Availability of Assets.........................................................................21
5.9. Governmental Permits...........................................................................21
5.10. Real Property..................................................................................22
5.11. Real Property Leases...........................................................................22
5.12. Condemnation...................................................................................22
5.13. Personal Property..............................................................................22
5.14. Personal Property Leases.......................................................................22
5.15. Intellectual Property; Software................................................................23
5.16. Accounts Receivable; Inventories...............................................................25
5.17. Title to Property..............................................................................25
5.18. Employees and Related Agreements; ERISA........................................................25
5.19. Employee Relations.............................................................................27
5.20. Contracts......................................................................................27
5.21. Status of Contracts............................................................................28
5.22. No Violation or Litigation.....................................................................29
5.23. Environmental Matters..........................................................................29
5.24. Insurance......................................................................................30
5.25. Suppliers......................................................................................31
5.26. Budgets........................................................................................31
5.27. No Finder......................................................................................31
5.28. Disclosure.....................................................................................31
5.29. Financial Projections..........................................................................31
5.30. Termination of Liens...........................................................................32
5.31. Creditor List..................................................................................32
5.32. Fairness Opinion...............................................................................32
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER..........................................................................32
6.1. Organization of Buyer..........................................................................32
6.2. Authority of Buyer.............................................................................32
6.3. No Finder......................................................................................33
ARTICLE VII
ACTION PRIOR TO THE CLOSING DATE.................................................................................33
7.1. Investigation of the Division by Buyer.........................................................33
7.2. Preserve Accuracy of Representations and Warranties............................................33
7.3. Consents of Third Parties; Governmental Approvals..............................................34
7.4. Operations Prior to the Closing Date...........................................................34
7.5. Notification by Sellers of Certain Matters.....................................................36
ARTICLE VIII
ADDITIONAL AGREEMENTS............................................................................................36
8.1. Covenant Not to Compete or Solicit Business....................................................36
8.2. Sellers' Grant of Limited Right to Use Name....................................................37
8.3. Taxes..........................................................................................39
8.4. Discharge of Divisions'Liabilities.............................................................40
8.5. Employees and Employee Benefit Plans...........................................................40
8.6. Change in Corporate Name.......................................................................42
8.7. Covenant Not To Xxx; General Release...........................................................43
8.8. Use of Proceeds................................................................................43
8.9. Transition Services............................................................................
8.10. Use of Customer Data...........................................................................45
8.11. Release of Sellers'Obligations.................................................................45
8.12. Substitution of Certificate of Deposit.........................................................45
8.13. Stay Bonus Payments............................................................................
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.....................................................................45
9.1. No Misrepresentation or Breach of Covenants and Warranties.....................................46
9.2. No Changes or Destruction of Property..........................................................46
9.3. No Restraint or Litigation.....................................................................46
9.4. Necessary Governmental Approvals...............................................................46
9.5. Necessary Consents.............................................................................46
9.6. Title Insurance................................................................................47
9.7. Major Stockholders Releases....................................................................47
9.8. List of Creditors..............................................................................47
9.9. Fairness Opinion...............................................................................47
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS...................................................................47
10.1. No Misrepresentation or Breach of Covenants and Warranties.....................................47
10.2. No Restraint or Litigation.....................................................................47
10.3. Necessary Governmental Approvals...............................................................47
ARTICLE XI
INDEMNIFICATION..................................................................................................48
11.1. Indemnification by Sellers.....................................................................48
11.2. Indemnification by Buyer.......................................................................49
11.3. Notice of Claims...............................................................................49
11.4. Third Person Claims............................................................................50
11.5. Limitations of Indemnification.................................................................51
11.6. Adjustment to Purchase Price...................................................................51
ARTICLE XII
TERMINATION......................................................................................................51
12.1. Termination....................................................................................51
12.2. Notice of Termination..........................................................................51
12.3. Effect of Termination..........................................................................51
ARTICLE XIII
GENERAL PROVISIONS...............................................................................................52
13.1. Survival of Obligations........................................................................52
13.2. Confidential Nature of Information.............................................................52
13.3. No Public Announcement.........................................................................52
13.4. Notices........................................................................................52
13.5. Successors and Assigns.........................................................................53
13.6. Access to Records after Closing................................................................54
13.7. Entire Agreement; Amendments...................................................................54
13.8. Partial Invalidity.............................................................................54
13.9. Waivers........................................................................................54
13.10. Expenses.......................................................................................55
13.11. Execution in Counterparts......................................................................55
13.12. Enforcement of Agreement.......................................................................55
13.13. Further Assurances.............................................................................55
13.14. Governing Law..................................................................................56
13.15. Time is of the Essence.........................................................................56
13.16. Submission to Jurisdiction.....................................................................56
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of September 7, 2000, among
Peapod, Inc., a Delaware corporation ("Buyer"), Xxxxxxxxxx.xxx, Inc., a Delaware
corporation ("Parent"), Beacon Home Direct, Inc. (d/b/a Scotty's Home Market),
an Illinois corporation and wholly-owned subsidiary of Parent ("Beacon"), and
Streamline Mid-Atlantic, Inc., a Delaware corporation and wholly-owned
subsidiary of Parent ("Mid-Atlantic" and, together with Beacon, the
"Subsidiaries" and the Subsidiaries together with Parent, the "Sellers," each, a
"Seller").
WHEREAS, Parent is, among other things, engaged through Beacon
(the "Chicago Division") in the business of Internet-based ordering and delivery
of groceries and other consumer goods in the Chicago, Illinois-area market (the
"Chicago Business") and through Mid-Atlantic (the "Maryland Division" and,
together with the Chicago Division, the "Divisions") in such business in the
Washington, D.C.-area market (the "Maryland Business" and, together with the
Chicago Business, the "Business"); and
WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to
purchase from Sellers the Purchased Assets, as hereinafter defined, all on the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in considerations of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed among Sellers and Buyer as
follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
1.1. DEFINITIONS. In this Agreement, the following terms have
the meanings specified or referred to in this SECTION 1.1 and shall be equally
applicable to both the singular and plural forms.
"ADDITIONAL ACCOUNTING FIRM" has the meaning specified in
SECTION 3.3(d).
"AFFIDAVIT OF CREDITORS" has the meaning specified in SECTION
9.8.
"AFFILIATE" means, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by or is under
common control with such Person.
"AFTER-TAX BASIS" means, with respect to any amount which is
to be paid hereunder on an "After-Tax Basis," an amount which, after subtraction
of the amount of all federal, state and foreign Taxes payable by the recipient
thereof as a result of the receipt or accrual of such payment, and after taking
into account (i) the increase in federal, state and foreign Taxes (including
estimated Taxes) payable by such recipient for all affected taxable years as a
result of the event or occurrence giving rise to such payment (the "Indemnified
Event"), and (ii) the reduction in federal, state and foreign Taxes (including
estimated Taxes) payable by the recipient for all taxable years ending on or
before the end of the taxable year in
which such payment is made, shall be sufficient as of the date of payment to
compensate the recipient for such Indemnified Event.
"AGREED ACCOUNTING PRINCIPLES" means generally accepted
accounting principles consistently applied, PROVIDED that, with respect to any
matter as to which there is more than one generally accepted accounting
principle, Agreed Accounting Principles means the generally accepted accounting
principles applied in the preparation of the balance sheet of Parent as of July
1, 2000 included in SCHEDULE 5.4.
"AGREED ADJUSTMENTS" has the meaning specified in SECTION
3.3(d).
"ALLOCATION SCHEDULE" has the meaning specified in SECTION
3.4.
"ASSUMED LIABILITIES" has the meaning specified in SECTION
2.3.
"AUDITORS" means PricewaterhouseCoopers LLP, auditors to
Mid-Atlantic.
"BALANCE SHEET" has the meaning specified in SECTION 5.4.
"BALANCE SHEET DATE" means July 29, 2000.
"BUSINESS" has the meaning specified in the first recital to
this Agreement.
"BUSINESS PROPERTY" means any real or personal property,
plant, building, facility, structure, underground storage tank, equipment or
unit, or other asset owned, leased or operated by any Seller and used primarily
in the Business.
"BUYER" has the meaning specified in the first paragraph of
this Agreement.
"BUYER ANCILLARY AGREEMENTS" means all agreements, instruments
and documents being or to be executed and delivered by Buyer under this
Agreement or in connection herewith.
"BUYER GROUP MEMBER" means Buyer and its Affiliates and their
respective successors and assigns.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section Section 9601 et seq.
"CHICAGO BUSINESS" has the meaning specified in the first
recital to this Agreement.
"CHICAGO DIVISION" has the meaning specified in the first
recital to this Agreement.
"CLAIM NOTICE" has the meaning specified in SECTION 11.3(a).
"CLOSING" means the closing of the transfer of the Purchased
Assets from Sellers to Buyer.
"CLOSING DATE" has the meaning specified in SECTION 4.1.
"CLOSING DATE BALANCE SHEET" has the meaning specified in
SECTION 3.3(e).
"CODE" means the Internal Revenue Code of 1986.
"CONTAMINANT" means any waste, pollutant, hazardous or toxic
substance or waste, petroleum, petroleum-based substance or waste, special
waste, or any constituent of any such substance or waste.
"CONTINUING EMPLOYEES" has the meaning specified in SECTION
8.5(b).
"COPYRIGHTS" means United States and foreign copyrights and
mask works, whether registered or unregistered, along with the registrations and
pending applications to register the same.
"COURT ORDER" means any judgment, order, award or decree of
any foreign, federal, state, local or other court or tribunal and any award in
any arbitration proceeding.
"CREDITOR ESCROW ACCOUNT" has the meaning specified in SECTION
3.3.
"CREDITOR ESCROW AGREEMENT" has the meaning specified in
SECTION 3.3.
"CREDITOR ESCROW AMOUNT" has the meaning specified in SECTION
3.3.
"CUSTOMER DATA" has the meaning specified in SECTION 2.1(p).
"DIVISIONS" has the meaning specified in the first recital to
this Agreement.
"EMPLOYMENT DATE" has the meaning specified in SECTION 8.5(a).
"ENCUMBRANCE" means any lien (statutory or other), claim,
charge, security interest, mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale or other title retention agreement, preference,
priority or other security agreement or preferential arrangement of any kind or
nature, and any easement, encroachment, covenant, restriction, right of way,
defect in title or other encumbrance of any kind.
"ENVIRONMENTAL ENCUMBRANCE" means an Encumbrance in favor of
any Governmental Body for (i) any liability under any Environmental Law, or (ii)
damages arising from, or costs incurred by such Governmental Body in response
to, a Release or threatened Release of a Contaminant into the environment.
"ENVIRONMENTAL LAW" means all Requirements of Laws derived
from or relating to all federal, state and local laws or regulations relating to
or addressing the environment, health or safety, including CERCLA, OSHA and RCRA
and any state equivalent thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXCLUDED ASSETS" has the meaning specified in SECTION 2.2.
"EXPENSES" means any and all expenses incurred in connection
with investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including court filing
fees, court costs, arbitration fees or costs, witness fees, and reasonable fees
and disbursements of legal counsel, investigators, expert witnesses,
consultants, accountants and other professionals).
"FINAL CLOSING DATE BALANCE SHEET" has the meaning specified
in SECTION 3.3(d).
"GOVERNMENTAL BODY" means any foreign, federal, state, local
or other governmental authority or regulatory body.
"GOVERNMENTAL PERMITS" has the meaning specified in SECTION
5.9.
"INDEMNITY ESCROW ACCOUNT" has the meaning specified in
SECTION 3.2.
"INDEMNITY ESCROW AGREEMENT" has the meaning specified in
SECTION 3.2.
"INDEMNITY ESCROW AGENT" has the meaning specified in SECTION
3.2.
"INDEMNITY ESCROW AMOUNT" has the meaning specified in SECTION
3.2.
"INITIAL CREDITOR ESCROW AMOUNT" has the meaning specified in
SECTION 3.3(a).
"INSTRUMENT OF ASSIGNMENT" means the Instrument of Assignment
in the form of Exhibit A.
"INSTRUMENT OF ASSUMPTION" means the Instrument of Assumption
in the form of Exhibit B.
"INTELLECTUAL PROPERTY" means Copyrights, Patent Rights,
Trademarks and Trade Secrets.
"IRS" means the Internal Revenue Service.
"KPMG" means KPMG LLP, independent accountants of Buyer.
"LIABILITIES" has the meaning specified in SECTION 3.3(b).
"LEASED EMPLOYEES" has the meaning specified in SECTION
8.5(a).
"LEASED REAL PROPERTY" has the meaning specified in SECTION
5.11.
"LETTER OF UNDERSTANDING" means the letter agreement dated
August 28, 2000 between Buyer, Parent and the Major Stockholders.
"LOSSES" means any and all losses, costs, obligations,
liabilities, settlement payments, awards, judgments, fines, penalties, damages,
deficiencies or other charges.
"MAJOR STOCKHOLDERS" means Nordstrom, Inc., Reliance Insurance
Company, Xxxxxxx X. XxXxxxx and each of the Sellers.
"MAJOR STOCKHOLDERS RELEASES" means a release, dated the
Closing Date, in the form of Exhibits C-1, C-2, C-3 and C-4, executed by each of
the Major Stockholders that is a signatory thereto.
"MARYLAND BUSINESS" has the meaning specified in the first
recital to this Agreement.
"MARYLAND DIVISION" has the meaning specified in the first
recital to this Agreement.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
Section Section 651 et seq.
"OWNED REAL PROPERTY" has the meaning specified in SECTION
5.10.
"OWNED SOFTWARE" has the meaning specified in SECTION 5.15.
"PATENT RIGHTS" means United States and foreign patents,
provisional patent applications, patent applications, continuations,
continuations-in-part, re-examinations, patents by addition, Supplemental
Protection Certificates, patent term extensions, divisions, renewals, reissues,
patent disclosures, industrial designs, inventions (whether or not patentable or
reduced to practice) and improvements thereto and extensions thereof.
"PERMITTED ENCUMBRANCES" means (i) liens for Taxes, other
governmental charges and assessments which are not yet due and payable; (ii)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other similar liens imposed by law arising in the ordinary
course of business for sums not yet due and payable; (iii) Encumbrances set
forth in SCHEDULE 5.17; and (iv) other liens or imperfections on property which
do not adversely affect title to, detract from the value of, or impair the
existing use of, the property affected by such lien or imperfection.
"PERSON" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"PRELIMINARY CLOSING DATE BALANCE SHEET" has the meaning
specified in SECTION 3.3(b).
"PURCHASE PRICE" has the meaning specified in SECTION 3.1.
"PURCHASED ASSETS" has the meaning specified in SECTION 2.1.
"RCRA" means the Resource Conservation and Recovery Act, 42
U.S.C. Section Section 6901 Et seq.
"RELEASE" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration of a Contaminant into the indoor or outdoor environment or into or out
of any Business Property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Business Property.
"REMEDIAL ACTION" means actions required to (i) clean up,
remove, treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threatened Release or minimize the
further Release of Contaminants or (iii) investigate and determine if a remedial
response is needed and to design such a response and post-remedial
investigation, monitoring, operation and maintenance and care.
"REQUIREMENTS OF LAWS" means any foreign, federal, state and
local laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body (including those pertaining to
electrical, building, zoning, environmental and occupational safety and health
requirements) or common law.
"SELLER" and "SELLERS" have the meanings specified in the
first paragraph of this Agreement.
"SELLER AGREEMENTS" has the meaning specified in SECTION 5.21.
"SELLER ANCILLARY AGREEMENTS" means all agreements,
instruments and documents being or to be executed and delivered by any Seller
under this Agreement or in connection herewith.
"SELLER GROUP MEMBER" means Sellers and their respective
Affiliates and their respective successors and assigns.
"SELLER PLANS" has the meaning specified in SECTION 8.5(c).
"SOFTWARE" means, whether in source code, object code or human
readable form, all computer software programs, software systems, tool sets,
compilers, and high-level or proprietary languages along with all related
technical manuals, user manuals, and other documentation and materials and all
databases and data compilations.
"STRADDLE PERIOD" means any taxable year or period beginning
on or before and ending after the Closing Date.
"STREAMLINE TRADEMARKS" has the meaning specified in SECTION
8.2(a).
"SUBSIDIARIES" has the meaning specified in the first
paragraph of this Agreement.
"TAX" (and, with correlative meaning, "TAXABLE") means: (i)
any federal, state, local or foreign net income, gross income, gross receipts,
windfall profit, severance, property, production, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or add-on minimum, ad
valorem, value-added, transfer, stamp, or environmental (including taxes under
Code Section 59A) tax, or any other tax, custom, duty, governmental fee or other
like
assessment or charge of any kind whatsoever, together with any interest or
penalty, addition to tax or additional amount imposed by any Governmental Body;
and (ii) any liability for the payment of amounts with respect to payments of a
type described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group, or as a result of any obligation under
any Tax Sharing Arrangement or Tax indemnity agreement.
"TAX RETURN" means any return, report or similar statement
required to be filed with respect to any Taxes (including any attached
schedules), including any information return, claim for refund, amended return
or declaration of estimated Tax.
"TAX SHARING ARRANGEMENT" means any written or unwritten
agreement or arrangement for the allocation or payment of Tax liabilities or
payment for Tax benefits with respect to a consolidated, combined or unitary Tax
Return which Tax Return includes any Seller.
"TITLE POLICY", means, with respect to any Owned Real
Property, an ALTA owner's title insurance policy, 1990 form, and, with respect
to any Leased Real Property, an ALTA's leasehold owner's title insurance policy,
in each case with (i) an endorsement deleting the "creditor's rights" exception
or exclusion, with extended coverage over general exceptions 1 (rights or claims
of parties in possession), 2 (survey matters), 3 (easements or claims of
easements not shown by the public records), 4 (mechanic's liens) and 5 (taxes or
special assessments not shown as existing liens); (ii) a Form 3.1 zoning
endorsement (including parking); (iii) a contiguity endorsement, if applicable;
(iv) an access endorsement; (v) a comprehensive endorsement; (vi) endorsements
insuring compliance with any covenants, conditions and restrictions constituting
Permitted Encumbrances; (vii) a survey endorsement; (viii) a tax parcel or tax
number endorsement; and (ix) such other endorsements as Buyer shall reasonably
request, all such endorsements to be in form and substance satisfactory to
Buyer, written by a nationally recognized title insurance company in amount,
form and substance satisfactory to Buyer and providing that, upon the
satisfaction of the conditions specified therein, in the case of Owned Real
Property, Buyer will have good and marketable title to the Owned Real Property,
free and clear of all Encumbrances, except for Permitted Encumbrances.
"TRADEMARKS" means United States, state and foreign
trademarks, service marks, trade names, Internet domain names, designs,
logotypes, slogans and general intangibles of like nature, whether registered or
unregistered, including all common law rights in and all goodwill associated
with the foregoing, and all registrations and pending applications to register
the foregoing.
"TRADE SECRETS" means confidential ideas, trade secrets,
know-how, concepts, methods, processes, formulae, technology, algorithms,
models, reports, data, customer lists, supplier lists, mailing lists, business
plans, and other proprietary information.
"TRANSITION SERVICES" has the meaning specified in SECTION
8.9.
1.2. INTERPRETATION. For purposes of this Agreement, (i) the
words "include," "includes" and "including" shall be deemed to be followed by
the words "without limitation," (ii) the word "or" is not exclusive and (iii)
the words "herein", "hereof", "hereby", "hereto" and "hereunder" refer to this
Agreement as a whole. Unless the context otherwise requires,
references herein: (i) to Articles, Sections, Exhibits and Schedules mean the
Articles and Sections of, and the Exhibits and Schedules attached to, this
Agreement; (ii) to an agreement, instrument or other document means such
agreement, instrument or other document as amended, supplemented and modified
from time to time to the extent permitted by the provisions thereof and by this
Agreement; and (iii) to a statute means such statute as amended from time to
time and includes any successor legislation thereto and any regulations
promulgated thereunder. The Schedules and Exhibits referred to herein shall be
construed with and as an integral part of this Agreement to the same extent as
if they were set forth verbatim herein. Titles to Articles and headings of
Sections are inserted for convenience of reference only and shall not be deemed
a part of or to affect the meaning or interpretation of this Agreement.
ARTICLE II
PURCHASE AND SALE
2.1. PURCHASED ASSETS. Upon the terms and subject to the
conditions of this Agreement (including the exclusions set forth in SECTION
2.2), on the Closing Date, Sellers shall sell, transfer, assign, convey and
deliver to Buyer, and Buyer shall purchase from Sellers, on a going concern
basis, free and clear of all Encumbrances (except for Permitted Encumbrances),
the Business and the goodwill associated therewith and all of the assets and
properties of any Seller of every kind and description, wherever located, real,
personal or mixed, tangible or intangible, used primarily in connection with the
Business as the same shall exist on the Closing Date (herein collectively called
the "Purchased Assets"), including all right, title and interest of each Seller
in, to and under:
(a) all of the assets reflected on the Balance Sheet, except
those assets disposed of or converted into cash after the Balance Sheet Date and
through the Closing Date in the ordinary course of business;
(b) all notes and accounts receivable generated by the
Business including Certified rebate receivables and coupon clearing receivables;
(c) all inventory of the Divisions;
(d) the Governmental Permits listed in SCHEDULE 5.9;
(e) all prepaid expenses, including coolers/totes,
miscellaneous prepaids, prepaid catalog/rent, technical support reserve and
miscellaneous Maryland Division items;
(f) the real estate leases (and leasehold improvements
relating thereto) listed in SCHEDULE 5.11 and all deposits related thereto;
(g) the machinery, equipment, vehicles, furniture and other
personal property listed or referred to in SCHEDULE 5.13;
(h) the personal property leases listed in SCHEDULE 5.14 and
all deposits related thereto;
(i) the Copyrights, Patent Rights and Trademarks (and all
goodwill associated therewith), and the agreements, contracts, licenses,
sublicenses, assignments and indemnities listed in SCHEDULE 5.15, except for
items a, b, d, e, i and j listed under (a) in SCHEDULE 5.15;
(j) the contracts, agreements or understandings listed or
described in SCHEDULE 5.20;
(k) all Trade Secrets and other proprietary or confidential
information used primarily in or relating primarily to the Business;
(l) the Software listed in SCHEDULE 5.15 except to the extent
Software listed under (b) (I) (1), (2) or (3) of SCHEDULE 5.15 resides on
computers located at Parent;
(m) all of any Seller's rights, claims or causes of action
against third parties relating to the Business (to the extent such claims or
causes of action relate to the Business), or the assets or properties of the
Business (to the extent such rights, claims or causes of action relate to such
assets) arising out of transactions occurring prior to the Closing Date;
(n) all books and records (including all data and other
information stored on discs, tapes or other media) of any Seller relating
primarily to the Business or the assets or properties of the Business, including
sales, advertising and marketing materials;
(o) all telephone, telex and telephone facsimile numbers and
other directory listings utilized by any Seller primarily in connection with the
Business;
(p) all customer lists, customer data and databases, customer
mailing and subscription lists and customer records relating to the Business in
whatever form or medium such information is contained (the "Customer Data");
(q) the names "Scotty's", "Scotty's Market" and "Scotty's Home
Market" and the domain name "xxx.xxxxxxxxxxxxx.xxx,"
"xxx.xxxxxxxxxxxxxxxxx.xxx," "xxx.xxxxxxxxxx.xxx" and "xxx.xxxxxxxxxxxxxxxx.xxx"
and the associated web sites (and all content of such web sites) or similar
trade names, trademarks, service marks or logos to the extent the same
incorporate the name "Scotty's," "Scotty's Market," "Scotty's Home Market" or
"Scottysmkt"; and
(r) all sales tax rebates relating to the Business.
2.2. EXCLUDED ASSETS. Notwithstanding the provisions of
SECTION 2.1, the Purchased Assets shall not include the following (herein
referred to as the "Excluded Assets"):
(a) any cash, bank deposits and cash equivalents and any
receivables represented by deposits-in-transit;
(b) except to the extent provided in SECTION 8.2, the names
"Streamline", "Xxxxxxxxxx.xxx" or any related or similar trade names,
trademarks, service marks or logos to the extent the same incorporate the name
"Streamline" or "Xxxxxxxxxx.xxx" or any variation thereof or any other such item
listed on SCHEDULE 5.15(a) at items a, b, d, e, i or j;
(c) any Seller's rights, claims or causes of action against
third parties relating to the Business or the assets or properties of the
Business which might arise in connection with the discharge by any Seller of the
Excluded Liabilities;
(d) any Seller's rights under the leases, agreements,
contracts and commitments listed in SCHEDULE 2.2(A);
(e) the machinery, equipment, vehicles, furniture or other
personal property or inventory listed in SCHEDULE 2.2(B);
(f) any Seller's employee benefit agreements, plans or
arrangements listed in SCHEDULE 5.18(A) or otherwise maintained by Seller on
behalf of persons employed by any Seller in the Business;
(g) all shares of capital stock of the Subsidiaries; and
(h) prepaid insurance expense.
2.3. ASSUMED LIABILITIES. On the Closing Date, Buyer shall
deliver to Sellers the Instrument of Assumption pursuant to which Buyer shall
assume and agree to discharge the following obligations and liabilities of
Sellers in accordance with their respective terms and subject to the respective
conditions thereof:
(a) all liabilities in respect of Taxes for which Buyer is
liable pursuant to SECTION 8.3;
(b) all obligations and liabilities of each Seller under each
contract, agreement and understanding included among the Purchased Assets (other
than obligations and liabilities relating to or arising from actions, or the
lack thereof, prior to the Closing);
(c) all capital and operating lease obligations reflected on
the Balance Sheet and consisting of the following: with respect to the Chicago
Business, the building, warehouse equipment leases listed in SCHEDULE 5.14,
delivery vehicles, forklifts, phone system, ISDN/DSI, Internet and copier
leases, and, with respect to the Maryland Division, refrigerator leases, office
furniture, equipment leases listed in SCHEDULE 5.14 and the real property
leases, other than capitalized lease obligations reflected on SCHEDULE 2.2(A);
(d) the payment obligations set forth on SCHEDULE 2.3(D); and
(e) naccruals for vacation and sick pay for Continuing
Employees.
All of the foregoing liabilities and obligations to be assumed
by Buyer hereunder (excluding any Excluded Liabilities) are referred to herein
as the "Assumed Liabilities."
2.4. EXCLUDED LIABILITIES. Buyer shall not assume or be
obligated to pay, perform or otherwise discharge any liability or obligation of
any Seller, direct or indirect, known or unknown, absolute or contingent, not
expressly assumed by Buyer pursuant to the Instrument of Assumption (all such
liabilities and obligations not being assumed being herein called the
"Excluded Liabilities") and, notwithstanding anything to the contrary in SECTION
2.3, none of the following shall be Assumed Liabilities for purposes of this
Agreement:
(a) any liabilities in respect of Taxes for which any Seller
is liable pursuant to SECTION 8.3;
(b) any payables and other liabilities or obligations of the
Divisions to any Seller or any of their respective Affiliates;
(c) any costs and expenses incurred by any Seller incident to
its negotiation and preparation of this Agreement and its performance and
compliance with the agreements and conditions contained herein;
(d) any liabilities or obligations in respect of any Excluded
Assets;
(e) any liabilities in respect of the lawsuits, claims, suits,
proceedings or investigations set forth in SCHEDULE 5.22;
(f) accrued liabilities of any kind, including accrued
payroll, accrued expenses and accrued sales tax liabilities;
(g) any liabilities and obligations related to, or arising
from (i) the occupancy, operation, use or control of any of the Business
Property prior to the Closing Date or (ii) the operation of the Business prior
to the Closing Date, in each case incurred or imposed by any Environmental Law,
including liabilities and obligations related to, or arising from, any Release
of any Contaminant on, at or from (A) the Business Property, including all
facilities, improvements, structures and equipment thereon, surface water
thereon or adjacent thereto and soil or groundwater thereunder, or any
conditions whatsoever on, under or in the vicinity of such real property, in
each case prior to the Closing Date or (B) any real property or facility owned
by a third Person to which Contaminants generated by the Business were sent
prior to the Closing Date;
(h) any product liability or claims for injury to person or
property, regardless of when made or asserted, relating to products distributed
or sold by either Division or services performed by any Seller prior to the
Closing Date;
(i) obligations and liabilities relating to the Xxxxxx'x
relationship;
(j) the systems contracts, agreements or commitments (other
than those related exclusively or primarily to the Chicago Division);
(k) fees or commissions of any broker, finder, financial
advisor or intermediary, including Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation;
(l) other than as set forth in SECTION 2.3(d) and (e),
employee severance, stay bonuses and other employee obligations and liabilities
to any current or former employees of the Business;
(m) current payables of any kind;
(n) obligations and liabilities relating to the Ogilvy
relationship; and
(o) obligations and liabilities relating to trucks used in the
Maryland Division, including any equipment located therein or affixed thereto.
ARTICLE III
PURCHASE PRICE
3.1. PURCHASE PRICE. The purchase price for the Purchased
Assets (the "Purchase Price") shall be Eleven Million Six Hundred Twelve
Thousand Two Hundred Seventy Two Dollars ($11,612,272).
3.2. INDEMNITY ESCROW. On or prior to the Closing Date, Buyer,
Sellers and Bank One Trust Company, National Association, a national banking
association, as escrow agent (the "Indemnity Escrow Agent"), shall enter into an
escrow agreement substantially in the form of Exhibit D (the "Indemnity Escrow
Agreement") providing for the establishment of an escrow account (the "Indemnity
Escrow Account") with the Indemnity Escrow Agent. At the Closing, Buyer shall
deposit in the Indemnity Escrow Account so established $200,000, to secure the
obligations of Sellers to Buyer pursuant to SECTION 11.1 (the "Indemnity Escrow
Amount"), which shall be held, invested and subsequently disbursed in accordance
with the terms, conditions and provisions of the Indemnity Escrow Agreement. The
Indemnity Escrow Agent's fees shall be paid 50% by Buyer, on the one hand, and
50% by the Sellers, on the other.
3.3. CREDITOR ESCROW.
(a) On or prior to the Closing Date, Buyer shall establish a
separate bank account (the "Creditor Escrow Account") to secure the obligations
of Parent and Mid-Atlantic to their creditors listed in the affidavit provided
by Sellers pursuant to SECTION 9.8 and to secure the obligations of Sellers to
obtain the consents to assignment of the Xxxxxxx Chevrolet Lease set forth on
SCHEDULE 5.3 (the "Xxxxxxx Consent") and the Harleyville Lease set forth on
SCHEDULE 5.3 (the "Harleyville Consent"). At the Closing, Buyer shall deposit
into the Creditor Escrow Account so established, One Million Four Hundred
Thousand Dollars ($1,400,000) (the "Initial Creditor Escrow Amount," as adjusted
in accordance with this SECTION 3.3, the "Creditor Escrow Amount"), which shall
be held, invested and subsequently disbursed in accordance with the terms,
conditions and provisions of this SECTION 3.3.
(b) Promptly following the Closing Date, but in any event no
later than 15 days after the Closing Date, Parent or Mid-Atlantic shall prepare
a balance sheet of the Maryland Business dated as of the Closing Date (the
"Preliminary Closing Date Balance Sheet"). The Preliminary Closing Date Balance
Sheet shall be prepared in accordance with GAAP applying the Agreed Accounting
Principles and shall fairly reflect the accounts payable and other accrued
liabilities (the "Liabilities") as of the Closing Date.
(c) Promptly following receipt of the Preliminary Closing Date
Balance Sheet, Buyer may review the same and, within 15 days after the date of
such receipt, may deliver to Parent a certificate setting forth its objections
to the Liabilities reflected in the Preliminary Closing Date Balance Sheet,
together with a summary of the reasons therefor and calculations which, in its
view, are necessary to eliminate such objections. In the event Buyer does not so
object within such 15-day period, the Preliminary Closing Date Balance Sheet
shall be final and binding as the "Closing Date Balance Sheet" for purposes of
this Agreement and shall provide the basis for determining the Creditor Escrow
Amount.
(d) In the event Buyer so objects within such 15-day period,
Parent and Buyer shall use their reasonable efforts to resolve by written
agreement (the "Agreed Adjustments") any differences as to the Preliminary
Closing Date Balance Sheet and, in the event Parent and Buyer so resolve any
such differences, the Preliminary Closing Date Balance Sheet as adjusted by the
Agreed Adjustments shall be final and binding as the Closing Date Balance Sheet
for purposes of this Agreement and shall provide the basis for determining the
Creditor Escrow Amount. In the event any objections raised by Seller are not
resolved by Agreed Adjustments within the 15-day period next following such
15-day period, then Parent and Buyer shall jointly select a national accounting
firm acceptable to both the Parent and Buyer (or if they cannot agree on such
selection, a national (big-five) accounting firm will be selected by lot after
eliminating Auditors and KPMG) and the firm so selected (the "Additional
Accounting Firm") shall be directed by Parent and Buyer to review and resolve
the disputed items with respect to the Preliminary Closing Date Balance Sheet as
promptly as reasonably practicable and, upon completion of such resolution, to
deliver written notice to each of the Parent and Buyer setting forth a detailed
explanation of such resolution. The Closing Date Balance Sheet after giving
effect to the resolutions of the Additional Accounting Firm is herein called the
"Final Closing Date Balance Sheet". The Final Closing Date Balance Sheet shall
be final and binding as the Closing Date Balance Sheet for purposes of this
Agreement and shall provide the basis for determining the Creditor Escrow
Amount.
(e) The parties hereto shall make available to Parent and
Buyer, and, if applicable, the Additional Accounting Firm, such books, records
and other information as they may reasonably request to audit or review the
Preliminary Closing Date Balance Sheet.
(f) Each party shall bear its own fees and expenses in
connection with the preparation and review of the statements and calculations
referred to in this SECTION 3.3. All fees and disbursements of any Additional
Accounting Firm designated in accordance with SECTION 3.3(d) hereof shall be
paid one-half by Parent and one-half by Buyer.
(g) Upon final determination of the Closing Date Balance Sheet
and the Liabilities pursuant to this SECTION 3.3, the Creditor Escrow Amount
shall be either (i) if the amount of the Liabilities is less than the Initial
Credit Escrow Amount, decreased by an amount equal to the amount then remaining
in the Creditor Escrow Account (taking into account disbursements made under
SECTION 3.3(h)) minus the Liabilities (in which case such excess shall be
promptly disbursed from the Creditor Escrow Account to Parent) or (ii) if the
amount of the Liabilities is greater than the Initial Credit Escrow Amount,
increased by an amount equal to the Liabilities minus the amount then remaining
in the Creditor Escrow Account (taking into account
disbursements made under SECTION 3.3(h)) (in which case Parent or Mid-Atlantic
shall promptly deposit an amount equal to such excess in the Credit Escrow
Account.)
(h) Buyer agrees that, upon receipt of evidence satisfactory
to Buyer that a creditor named in the Affidavit of Creditors has been timely
paid with respect to an amount reflected in such Affidavit of Creditors, Buyer
shall promptly release to Parent or Mid-Atlantic, if so directed by Parent, from
the Creditor Escrow Account a sum equal to such amount.
(i) Buyer agrees that, upon receipt by Buyer of the Xxxxxxx
Consent in form and substance satisfactory to Buyer, Buyer shall promptly
release to Parent from the Creditor Escrow Account $166,667 and upon receipt by
Buyer of the Harleyville Consent in form and substance satisfactory to Buyer,
Buyer shall promptly release to Parent from the Creditor Escrow Account
$333,333.
(j) At the written direction of Sellers, the Creditor Escrow
Amount shall be invested in any money market mutual fund registered under the
Investment Company Act of 1940, as amended or a bank savings account
(collectively, "Permitted Investments"). From time to time, at the request of
Parent, Buyer shall pay to Parent (or Mid-Atlantic if so directed by Parent) any
interest accrued on, and any profit resulting from, Permitted Investments in
accordance with this SECTION 3.3(j).
(k) Sellers shall include in income and otherwise report, for
all Tax purposes, and otherwise be liable for all Taxes with respect to the
interest on the Permitted Investments and any other income earned or accrued
with respect to the Creditor Escrow Amount. Sellers shall be responsible for,
and shall reimburse Buyer for, any bank fees and associated fees incurred by
Buyer in connection with the Creditor Escrow Account.
3.4. ALLOCATION OF PURCHASE PRICE. Buyer and Sellers agree to
confer as to the allocation of the Purchase Price for tax and accounting
purposes (any allocation mutually agreed upon by Buyer and Sellers, the
"ALLOCATION SCHEDULE"). The Allocation Schedule, if any, shall be reasonable and
shall be prepared in accordance with Section 1060 of the Code and the Treasury
Regulations thereunder. Each of Buyer and Sellers agrees to file Internal
Revenue Service Form 8594, and all federal, state, local and foreign Tax
Returns, in accordance with the Allocation Schedule, if any, and to provide the
other promptly with any other information required to complete Form 8594. In the
event that Buyer and Sellers do not reach an agreement as to the allocation of
the Purchase Price, then Buyer and Sellers shall not be bound by any partial or
preceding agreement with respect thereto and each may use such allocation as it
individually determines. Nothing in this SECTION 3.4 shall be construed as
requiring Buyer or any Seller to hire appraisers or otherwise incur
out-of-pocket expenses in order to reach agreement as to the allocation
described in this Section.
ARTICLE IV
CLOSING
4.1. CLOSING DATE. The Closing shall be consummated at 10:00
A.M., local time, on September 6, 2000 or such later date as may be agreed upon
by Buyer and Sellers after
the conditions set forth in ARTICLES IX and X have been satisfied or waived, at
the offices of Sidley & Austin, 10 X. Xxxxxxxx, Bank One Plaza, Chicago,
Illinois, or at such other place or at such other time as shall be agreed upon
by Buyer and Sellers. The Closing shall be deemed to have become effective as of
11:59 P.M., Eastern time, on the date on which the Closing is actually held, and
such time and date are sometimes referred to herein as the "Closing Date."
4.2. PAYMENT ON THE CLOSING DATE. Subject to fulfillment or
waiver of the conditions set forth in ARTICLE IX, at Closing Buyer shall (i) pay
Sellers an aggregate amount equal to the Purchase Price, MINUS the Indemnity
Escrow Amount, MINUS the Creditor Escrow Amount, by wire transfer of immediately
available funds to a bank account in the United States specified by Parent in
writing to Buyer at least two business days prior to the Closing; (ii) deposit
the Indemnity Escrow Amount in the Indemnity Escrow Account in accordance with
SECTION 3.2(a); and (iii) deposit the Creditor Escrow Amount in the Creditor
Escrow Account in accordance with SECTION 3.3.
4.3. BUYER'S ADDITIONAL DELIVERIES. Subject to fulfillment or
waiver of the conditions set forth in ARTICLE IX, at Closing Buyer shall deliver
to Parent all the following:
(a) a copy of Buyer's Certificate of Incorporation certified
as of a recent date by the Secretary of State of the State of Delaware;
(b) a certificate of good standing of Buyer issued as of a
recent date by the Secretary of State of the State of Delaware;
(c) a certificate of the secretary or an assistant secretary
of Buyer, dated the Closing Date, in form and substance reasonably satisfactory
to Sellers, as to (i) no amendments to the Certificate of Incorporation of Buyer
since a specified date; (ii) the by-laws of Buyer; (iii) the resolutions of the
Board of Directors of Buyer authorizing the execution, delivery and performance
of this Agreement and the Buyer Ancillary Agreements and the transactions
contemplated hereby and thereby; and (iv) incumbency and signatures of the
officers of Buyer executing this Agreement and any Buyer Ancillary Agreement;
(d) an opinion of counsel to Buyer substantially in the form
contained in Exhibit E
(e) the Instrument of Assumption duly executed by Buyer;
(f) the certificate of Buyer contemplated by SECTION 10.1,
duly executed by the President or any Vice President of Buyer; and
(g) the Indemnity Escrow Agreement duly executed by Buyer.
4.4. SELLERS' DELIVERIES. Subject to fulfillment or waiver of
the conditions set forth in ARTICLE X, at Closing Sellers shall deliver to Buyer
all the following:
(a) a copy of the Certificate of Incorporation of Parent and
Mid-Atlantic each certified as of a recent date by the Secretary of State of the
State of Delaware;
(b) a copy of the Certificate of Incorporation of Beacon
certified as of a recent date by the Secretary of State of the State of
Illinois;
(c) a certificate of good standing of each of Parent and
Mid-Atlantic issued as of a recent date by the Secretary of State of the State
of Delaware;
(d) a certificate of good standing of Beacon issued as of a
recent date by the Secretary of State of the State of Illinois;
(e) a certificate of the secretary or an assistant secretary
of each Seller, dated the Closing Date, in form and substance reasonably
satisfactory to Buyer, as to (i) no amendments to the Certificate of
Incorporation of such Seller since a specified date; (ii) the by-laws of such
Seller; (iii) the resolutions of the Board of Directors of each Seller and of
the sole stockholder of each Subsidiary authorizing the execution, delivery and
performance of this Agreement and the Seller Ancillary Agreements and the
transactions contemplated hereby and thereby; and (iv) incumbency and signatures
of the officers of such Seller executing this Agreement and any Seller Ancillary
Agreement;
(f) an opinion of counsel to Sellers substantially in the form
contained in Exhibit F;
(g) the Instrument of Assignment duly executed by Sellers;
(h) certificates of title or origin (or like documents) with
respect to any vehicles or other equipment included in the Purchased Assets for
which a certificate of title or origin is required in order to transfer title;
(i) all consents, waivers or approvals obtained by Sellers
with respect to the Purchased Assets or the consummation of the transactions
contemplated by this Agreement;
(j) the Indemnity Escrow Agreement duly executed by Sellers;
(k) the certificates of each Seller contemplated by SECTIONS
9.1 and 9.2, duly executed by the President or any Vice President of such
Seller;
(l) an assignment, in recordable form, with respect to each of
the leases of real estate described in SCHEDULE 5.11, duly executed by each
Seller and in form and substance reasonably satisfactory to Buyer;
(m) assignments, in recordable form, with respect to each of
the registered Copyrights, issued Patent Rights, registered Trademarks and
pending applications for the registration or issuance of any Copyrights, Patent
Rights and Trademarks included in the Purchased Assets, duly executed by each
Seller and in form and substance reasonably satisfactory to Buyer;
(n) the Major Stockholders Releases, duly executed by each of
the Major Stockholders that is a signatory thereto; and
(o) such other bills of sale, assignments and other
instruments of transfer or conveyance as Buyer may reasonably request or as may
be otherwise necessary to evidence and effect the sale, assignment, transfer,
conveyance and delivery of the Purchased Assets to Buyer.
In addition to the above deliveries, each Seller shall take
all steps and actions as Buyer may reasonably request or as may otherwise be
necessary to put Buyer in actual possession or control of the Purchased Assets.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, each Seller jointly and
severally represents and warrants to Buyer and agrees as follows:
5.1. ORGANIZATION OF SELLERS.
(a) Each Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
Each Seller is duly qualified to transact business as a foreign corporation and
is in good standing in each of the jurisdictions listed in SCHEDULE 5.1, which
jurisdictions are the only ones in which the ownership or leasing of the
Purchased Assets or the conduct of the Business requires such qualification. No
other jurisdiction has demanded, requested or otherwise indicated that any
Seller is required so to qualify on account of the ownership or leasing of the
Purchased Assets or the conduct of the Business. Sellers have full power and
authority to own or lease and to operate and use the Purchased Assets and to
carry on the Business as now conducted.
(b) True and complete copies of the Certificate or Articles of
Incorporation and all amendments thereto and of the by-laws, as amended to date,
of each Seller have been delivered to Buyer.
5.2. SUBSIDIARIES AND INVESTMENTS. Except for the Subsidiaries
or as set forth in SCHEDULE 5.2, none of the Sellers, directly or indirectly (i)
owns, of record or beneficially, any outstanding voting securities or other
equity interests in any corporation, partnership, joint venture or other entity
which is involved in or relates to the Business or (ii) controls any
corporation, partnership, joint venture or other entity which is involved in or
relates to the Business.
5.3. AUTHORITY OF SELLERS.
(a) Each Seller has full power and authority to execute,
deliver and perform this Agreement and all of the Seller Ancillary Agreements.
The execution, delivery and performance of this Agreement and the Seller
Ancillary Agreements by each Seller have been duly authorized and approved by
such Seller's board of directors, and, in the case of the Subsidiaries, by
Parent, the sole stockholder, and do not require any further authorization or
consent of any Seller or its stockholders. This Agreement has been duly
authorized, executed
and delivered by each Seller and is the legal, valid and binding obligation of
each Seller enforceable in accordance with its terms, except as such legality,
validity, binding effect or enforcement may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally or by equitable principles
relating to the availability of remedies, and each of the Seller Ancillary
Agreements has been duly authorized by each Seller and upon execution and
delivery by each Seller that is a party to such Seller Ancillary Agreement, will
be a legal, valid and binding obligation of each Seller enforceable in
accordance with its terms, except as such legality, validity, binding effect or
enforcement may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally or by equitable principles relating to the
availability of remedies.
(b) Except as set forth in SCHEDULE 5.3, neither the execution
and delivery of this Agreement or any of the Seller Ancillary Agreements or the
consummation of any of the transactions contemplated hereby or thereby nor
compliance with or fulfillment of the terms, conditions and provisions hereof or
thereof will:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or a
loss of rights under, or result in the creation or imposition of any
Encumbrance upon any of the Purchased Assets, under (A) the charter or
by-laws of any Seller, (B) any Seller Agreement, (C) any other material
note, instrument, agreement, mortgage, lease, license, franchise,
permit or other authorization, right, restriction or obligation to
which any Seller is a party or any of the Purchased Assets is subject
or by which any Seller is bound, (D) any Court Order to which any
Seller is a party or any of the Purchased Assets is subject or by which
any Seller is bound, or (E) any Requirements of Laws affecting any
Seller or the Purchased Assets; or
(ii) require the approval, consent, authorization or act of,
or the making by Seller or either Division of any declaration, filing
or registration with, any Person.
5.4. FINANCIAL STATEMENTS. SCHEDULE 5.4 contains (i) the
unaudited consolidated balance sheet of Parent as of July 1, 2000, and the
related consolidated statements of operations and cash flows for the period then
ended, together with the appropriate notes to such financial statements, (ii)
the unaudited balance sheets of the Chicago Division and of the Maryland
Division as of this July 1, 2000 and the related statements of operations for
the Divisions for the period then ended, (iii) the unaudited consolidating
balance sheet of Parent as of July 1, 2000, (iv) the unaudited balance sheet of
Parent as of July 29, 2000, of the Chicago Division as of July 29, 2000, of the
Maryland Division as of July 29, 2000 and the unaudited consolidating balance
sheets of Parent as of July 29, 2000 (v) the unaudited pro forma combined
balance sheet of the Chicago Division and the Maryland Division as of July 29,
2000 (the "Balance Sheet"). Except as set forth therein or in the notes thereto,
such balance sheets and statements of income and cash flow and consolidating
balance sheets have been prepared in conformity with generally accepted
accounting principles consistently applied, and such balance sheets and related
statements of income and cash flow present fairly the financial position,
results of operations and cash flows of Parent, the Chicago Division and the
Maryland Division, as the case may be, as of their respective dates and for the
respective periods covered thereby.
5.5. OPERATIONS SINCE BALANCE SHEET DATE.
(a) Except as set forth in SCHEDULE 5.5(A), since the Balance
Sheet Date, there has been:
(i) no material adverse change in the Purchased Assets, the
Business or the operations, liabilities, profits, prospects or
condition (financial or otherwise) of either Division, and no fact or
condition exists or is contemplated or, to the Sellers' knowledge,
threatened which might reasonably be expected to cause such a change in
the future; and
(ii) no damage, destruction, loss or claim, whether or not
covered by insurance, or condemnation or other taking adversely
affecting any of the Purchased Assets or the Business.
(b) Except as set forth in SCHEDULE 5.5(B), since the Balance
Sheet Date, Sellers have conducted the Business only in the ordinary course and
in conformity with past practice. Without limiting the generality of the
foregoing, since the Balance Sheet Date, except as set forth in such Schedule,
none of the Sellers has, in respect of the Business:
(i) sold, leased (as lessor), transferred or otherwise
disposed of (including any transfers from either Division to Seller or
any of its Affiliates), or mortgaged or pledged, or imposed or suffered
to be imposed any Encumbrance on, any of the assets reflected on the
Balance Sheet or any assets acquired by either Division after the
Balance Sheet Date, except for inventory and minor amounts of personal
property sold or otherwise disposed of for fair value in the ordinary
course of the Business consistent with past practice and except for
Permitted Encumbrances;
(ii) cancelled any debts owed to or claims held by either
Division (including the settlement of any claims or litigation) other
than in the ordinary course of the Business consistent with past
practice;
(iii) created, incurred or assumed, or agreed to create, incur
or assume, any indebtedness for borrowed money in respect of either
Division (other than money borrowed or advances from any Seller or any
of its Affiliates in the ordinary course of the Business consistent
with past practice) or entered into, as lessee, any capitalized lease
obligations (as defined in Statement of Financial Accounting Standards
No. 13);
(iv) accelerated or delayed collection of notes or accounts
receivable generated by the Business in advance of or beyond their
regular due dates or the dates when the same would have been collected
in the ordinary course of the Business consistent with past practice;
(v) delayed or accelerated payment of any account payable or
other liability of the Business beyond or in advance of its due date or
the date when such liability would have been paid in the ordinary
course of the Business consistent with past practice;
(vi) allowed the levels of raw materials, supplies,
work-in-process or other materials included in the inventory of either
Division to vary in any material respect from
the levels customarily maintained in the Business or from the amounts
reflected in the Balance Sheet;
(vii) made, or agreed to make, any payment of cash or
distribution of assets to any Seller or any of its Affiliates (other
than cash realized upon collection of receivables in the ordinary
course of the Business);
(viii) instituted any increase in any compensation payable to
any employee of any Seller with respect to the Business or in any
profit-sharing, bonus, incentive, deferred compensation, insurance,
pension, retirement, medical, hospital, disability, welfare or other
benefits made available to employees of any Seller with respect to the
Business;
(ix) prepared or filed any Tax Return inconsistent with past
practice or, on any such Tax Return, taken any position, made any
election, or adopted any method that is inconsistent with positions
taken, elections made or methods used in preparing or filing similar
Tax Returns in prior periods (including positions, elections or methods
which would have the effect of deferring income to periods for which
Buyer is liable pursuant to SECTION 8.3(a) or accelerating deductions
to periods for which any Seller is liable pursuant to SECTION 8.3(a));
or
(x) made any change in the accounting principles and practices
used by any Seller from those applied in the preparation of the Balance
Sheet and the related statements of income and cash flow for the period
then ended.
5.6. NO UNDISCLOSED LIABILITIES. Except as set forth in
SCHEDULE 5.6, none of the Sellers is subject, with respect to the Business, to
any liability (including unasserted claims, whether known or unknown), whether
absolute, contingent, accrued or otherwise, which is not shown or which is in
excess of amounts shown or reserved for in the Balance Sheet, other than
liabilities of the same nature as those set forth in the Balance Sheet and the
notes thereto and reasonably incurred in the ordinary course of the Business
after the Balance Sheet Date.
5.7. TAXES. Except as set forth in SCHEDULE 5.7, (i) Sellers
have, in respect of the Business and the Purchased Assets, filed all Tax Returns
which are required to be filed and have paid all Taxes which have become due
pursuant to such Tax Returns or pursuant to any assessment which has become
payable; (ii) all such Tax Returns are complete and accurate and disclose all
Taxes required to be paid in respect of the Business and the Purchased Assets;
(iii) there is no action, suit, investigation, audit, claim or assessment
pending or proposed or threatened with respect to Taxes of the Business and the
Purchased Assets, and, to the knowledge of each Seller, no basis exists
therefor; (iv) none of the Sellers has waived or been requested to waive any
statute of limitations in respect of Taxes associated with the Business or the
Purchased Assets; (v) all monies required to be withheld by any Seller
(including from employees of the Business for income Taxes and social security
and other payroll Taxes) have been collected or withheld, and either paid to the
respective taxing authorities, set aside in accounts for such purpose, or
accrued, reserved against and entered upon the books of the Business; (vi) no
transaction contemplated by this Agreement is subject to withholding under
Section 1445 of the Code; (vii) none of the Purchased Assets is properly treated
as owned by persons other than any Seller for income Tax purposes pursuant to
Section 168(f)(8) of the Code
(as in effect prior to its amendment by the Tax Reform Act of 1986) or
otherwise; (viii) none of the Purchased Assets is "tax-exempt use property"
within the meaning of Section 168(h) of the Code, or subject to a so-called
"TRAC lease" under Section 7701(h) of the Code (or any predecessor provision);
and (ix) following the Closing Date, pursuant to any agreement or arrangement
entered into by any Seller or any Affiliate thereof on or prior to the Closing
Date, Buyer will not be obligated to make a payment to an individual that would
be a "parachute payment" to a "disqualified individual" as those terms are
defined in Section 280G of the Code, without regard to whether such payment is
reasonable compensation for personal services performed or to be performed in
the future.
5.8. AVAILABILITY OF ASSETS.
(a) Except as set forth in SCHEDULE 5.8 and except for the
Excluded Assets, the Purchased Assets constitute all the assets used primarily
in the Business (including all books, records, computers and computer programs
and data processing systems) used primarily in the Business and are in good
condition (subject to normal wear and tear) and serviceable condition and are
suitable for the uses for which intended.
(b) SCHEDULE 5.8 sets forth a description of all material
services provided by any Seller or any Affiliate thereof with respect to the
Business utilizing either (i) assets not included in the Purchased Assets or
(ii) employees not listed in SCHEDULE 5.18(j) (other than those employees not
listed by reason of clause (i) of SECTION 5.18(j)) and the manner in which the
costs of providing such services have been allocated to the Business.
5.9. GOVERNMENTAL PERMITS.
(a) Sellers own, hold or possess all licenses, franchises,
permits, privileges, immunities, approvals and other authorizations from a
Governmental Body which are necessary to entitle them to own or lease, operate
and use the Purchased Assets and to carry on and conduct the Business
substantially as currently conducted, including the licenses and permits to sell
liquor (collectively, the "Governmental Permits"), except for such Governmental
Permits as to which the failure to so own, hold or possess would not have a
material adverse effect on the Purchased Assets, the Business or the operations,
liabilities, profits, prospects or condition (financial or otherwise) of either
Division. SCHEDULE 5.9 sets forth a list and brief description of each
Governmental Permit, except for such incidental licenses, permits and other
authorizations which would be readily obtainable by any qualified applicant
without undue burden in the event of any lapse, termination, cancellation or
forfeiture thereof. Complete and correct copies of all of the Governmental
Permits have heretofore been delivered to Buyer by Sellers.
(b) Except as set forth in SCHEDULE 5.9, (i) each Seller has
fulfilled and performed its obligations under each of the Governmental Permits,
and no event has occurred or condition or state of facts exists which
constitutes or, after notice or lapse of time or both, would constitute a breach
or default under any such Governmental Permit or which permits or, after notice
or lapse of time or both, would permit revocation or termination of any such
Governmental Permit, or which might adversely affect the rights of any Seller
under any such Governmental Permit; (ii) no notice of cancellation, of default
or of any dispute concerning any Governmental Permit, or of any event, condition
or state of facts described in the preceding
clause, has been received by, or is known to, any Seller; and (iii) each of the
Governmental Permits is valid, subsisting and in full force and effect and may
be assigned and transferred to Buyer in accordance with this Agreement and will
continue in full force and effect thereafter, in each case without (x) the
occurrence of any breach, default or forfeiture of rights thereunder, or (y) the
consent, approval, or act of, or the making of any filing with, any Governmental
Body.
5.10. REAL PROPERTY. SCHEDULE 5.10 contains a brief
description of (i) each parcel of real property owned by any Seller and used in
or relating to the Business (the "Owned Real Property") (showing the record
title holder, legal description, permanent index number, location, improvements,
the uses being made thereof and any indebtedness secured by a mortgage or other
Encumbrance thereon) and (ii) each option held by any Seller to acquire any real
property for use by either Division. All public utilities, including water,
sewer, gas, electric, telephone and drainage facilities, give adequate service
to the Owned Real Property, and the Owned Real Property has unlimited access to
and from publicly dedicated streets, the responsibility for maintenance of which
has been accepted by the appropriate Governmental Body. Complete and correct
copies of any title opinions, surveys and appraisals in any Seller's possession
or any policies of title insurance currently in force and in the possession of
any Seller with respect to each parcel of Owned Real Property have heretofore
been delivered by Sellers to Buyer.
5.11. REAL PROPERTY LEASES. SCHEDULE 5.11 sets forth a list
and brief description of each lease or similar agreement under which (i) any
Seller is lessee of, or holds or operates, any real property owned by any third
Person and used in or relating to the Business (the "Leased Real Property") or
(ii) any Seller is lessor of any of the Owned Real Property. Except as set forth
in such Schedule, such Seller has the right to quiet enjoyment of all the Leased
Real Property for the full term of the lease or similar agreement (and any
renewal option related thereto) relating thereto, and the leasehold or other
interest of such Seller in the Leased Real Property is not subject or
subordinate to any Encumbrance except for Permitted Encumbrances. Complete and
correct copies of any title opinions, surveys and appraisals in any Seller's
possession or any policies of title insurance currently in force and in the
possession of any Seller with respect to each parcel of Leased Real Property
have heretofore been delivered by Sellers to Buyer.
5.12. CONDEMNATION. Neither the whole nor any part of the
Owned Real Property or the Leased Real Property is subject to any pending suit
for condemnation or other taking by any Governmental Body, and, to the knowledge
of each Seller, no such condemnation or other taking is, to the Sellers'
knowledge, threatened or contemplated.
5.13. PERSONAL PROPERTY. SCHEDULE 5.13 contains a list of all
machinery, equipment, vehicles, furniture and other personal property owned by
any Seller used primarily in or relating primarily to the Business.
5.14. PERSONAL PROPERTY LEASES. SCHEDULE 5.14 contains a list
and description of each lease or other agreement or right, whether written or
oral, whether capitalized or operating (showing in each case the annual rental,
the expiration date thereof and a brief description of the property covered),
under which any Seller is lessee of, or holds or operates, any machinery,
equipment, vehicle or other tangible personal property owned by a third Person
and used primarily in or relating primarily to the Business, except for any such
lease, agreement or right that is terminable by such Seller without penalty or
payment on notice of 30 days or less, or which involves the payment by such
Seller of rentals of less than $5,000 per year.
5.15. INTELLECTUAL PROPERTY; SOFTWARE.
(a) SCHEDULE 5.15 contains a list and description (showing in
each case the registered or other owner, expiration date and registration or
application number, if any) of all Copyrights, Patents and Trademarks (including
all assumed or fictitious names under which any Seller is conducting the
Business or has within the previous five years conducted the Business) owned by,
licensed to or used by any Seller in connection with the conduct of the
Business.
(b) SCHEDULE 5.15 contains a list and description (showing in
each case any owner, licensor or licensee) of all Software owned by, licensed to
or used by any Seller primarily in the conduct of the Business, provided that
SCHEDULE 5.15 does not list mass market Software licensed to any Seller that is
available in consumer retail stores or otherwise generally commercially
available and subject to "shrink-wrap" or "click-through" license agreements.
(c) SCHEDULE 5.15 contains a list and description of all
agreements, contracts, licenses, sublicenses, assignments and indemnities that
relate to (i) any Copyrights, Patent Rights or Trademarks listed in SCHEDULE
5.15, (ii) any Trade Secrets owned by, licensed to or used by any Seller used
primarily in or relating primarily to the Business or (iii) any Software listed
in SCHEDULE 5.15.
(d) Except as disclosed in SCHEDULE 5.15, each Seller either:
(i) owns the entire right, title and interest in and to the Intellectual
Property and Software included in the Purchased Assets, free and clear of any
Encumbrance, or (ii) has the perpetual, royalty-free right to use the same.
Except as set forth in SCHEDULE 5.15, each Seller is listed in the records of
the appropriate United States, state or foreign registry as the sole current
owner of record for each application or registration identified in SCHEDULE 5.15
as being owned by such Seller.
(e) Except as disclosed in SCHEDULE 5.15: (i) all
registrations for Copyrights, Patent Rights and Trademarks identified in
SCHEDULE 5.15 as being owned by any Seller are valid and in force, and all
applications to register any unregistered Copyrights, Patent Rights and
Trademarks so identified are pending and in good standing, all without challenge
of any kind; (ii) the Intellectual Property owned by any Seller has not been
cancelled or abandoned and is valid and enforceable; and (iii) such Seller has
the sole and exclusive right to bring actions for infringement,
misappropriation, dilution, violation or unauthorized use of the Intellectual
Property and Software owned by such Seller, and to the knowledge of each Seller,
there is no basis for any such action. Correct and complete copies of: (x)
registrations for all registered Copyrights, Patent Rights and Trademarks
identified in SCHEDULE 5.15 as being owned by any Seller; and (y) all pending
applications to register unregistered Copyrights, Patent Rights and Trademarks
identified in SCHEDULE 5.15 as being owned by any Seller (together with any
subsequent correspondence or filings relating to the foregoing) have heretofore
been delivered by Sellers to Buyer.
(f) Except as set forth in SCHEDULE 5.15, (i) no infringement,
misappropriation, violation or dilution of any Intellectual Property, or any
rights of publicity or privacy relating to the use of names, likenesses, voices,
signatures or biographical information, of any other Person has occurred or
results in any way from the operations of the Business, (ii) no claim of any
infringement, misappropriation, violation or dilution of any Intellectual
Property or any such rights of any other Person has been made or asserted in
respect of the operations of the Business and (iii) none of the Sellers has had
notice of, or knowledge of any basis for, a claim against any Seller that the
operations, activities, products, software, equipment, machinery or processes of
the Business infringe, misappropriate, violate or dilute any Intellectual
Property or any such rights of any other Person.
(g) Except as disclosed in SCHEDULE 5.15: (i) the Software
included in the Purchased Assets is not subject to any transfer, assignment,
change of control, site, equipment, or other operational limitations; (ii) each
Seller has maintained and protected the Software included in the Purchased
Assets that it owns (the "Owned Software") (including all source code and system
specifications) with appropriate proprietary notices, confidentiality and
non-disclosure agreements and such other measures as are necessary to protect
the proprietary, trade secret or confidential information contained therein;
(iii) the Owned Software has been registered or is eligible for protection and
registration under applicable copyright law and has not been forfeited to the
public domain; (iv) each Seller has copies of all releases or separate versions
of its Owned Software so that the same may be subject to registration in the
United States Copyright Office; (v) each Seller has complete and exclusive
right, title and interest in and to its Owned Software; (vi) each Seller has
developed its Owned Software through its own efforts and for its own account
without the aid or use of any consultants, agents, independent contractors or
Persons (other than Persons that are employees of such Seller); (vii) the Owned
Software does not infringe, misappropriate, violate or dilute any Intellectual
Property of any other Person; (viii) any Owned Software includes the source
code, system documentation, statements of principles of operation and
schematics, as well as any pertinent commentary, explanation, program (including
compilers), workbenches, tools, and high-level or proprietary language used for
the development, maintenance, implementation and use thereof, so that a trained
computer programmer could develop, maintain, support, compile and use all
releases or separate versions of the same that are currently subject to
maintenance obligations by any Seller; (ix) there are no agreements or
arrangements in effect with respect to the marketing, distribution, licensing or
promotion of the Owned Software by any other Person; (x) the Owned Software
complies with all applicable Requirements of Laws relating to the export or
re-export of the same; and (xi) the Owned Software may be exported or reexported
to all countries without the necessity of any license, other than to those
countries specified as prohibited destinations pursuant to applicable
regulations of the U.S. Department of Commerce and/or the United States State
Department.
(h) Except as disclosed in SCHEDULE 5.15, all employees,
agents, consultants or contractors who have contributed to or participated in
the creation or development of any Intellectual Property or Software on behalf
of any Seller or any predecessor in interest thereto: (i) has created such
materials in the scope of his or her employment; (ii) is a party to a valid and
enforceable "work-for-hire" agreement under which such Seller is deemed to be
the author of the Copyrights; or (iii) has executed an assignment or an
agreement to assign in favor of such Seller (or such predecessor in interest, as
applicable) of all right, title and interest in such material.
5.16. ACCOUNTS RECEIVABLE; INVENTORIES.
(a) All accounts receivable of each Division have arisen from
bona fide transactions in the ordinary course of the Business. All accounts
receivable reflected in the Balance Sheet are good and represent amounts validly
due for goods and or services rendered at the aggregate recorded amounts
thereof, net of any applicable allowance for doubtful accounts reflected in the
Balance Sheet.
(b) The inventories of each Division (including raw materials,
supplies, work-in-process, finished goods and other materials) (i) are in good,
merchantable and useable condition, (ii) are reflected in the Balance Sheet at
the lower of cost or market in accordance with generally accepted accounting
principles and (iii) are, in the case of finished goods, of a quality and
quantity saleable in the ordinary course of business and, in the case of all
other inventories are of a quality and quantity useable in the ordinary course
of business. The inventory obsolescence policies of the Divisions are
appropriate for the nature of the products sold and the marketing methods used
by the Divisions, and the reserve for inventory obsolescence contained in the
Balance Sheet fairly reflects the amount of obsolete inventory as of the Balance
Sheet Date.
5.17. TITLE TO PROPERTY. Sellers have good and marketable
title in fee simple absolute to all Owned Real Property and to all buildings,
structures and other improvements thereon, in each case free and clear of all
Encumbrances, except for Permitted Encumbrances. Sellers have good and
marketable title to all of the other Purchased Assets, free and clear of all
Encumbrances, except for Permitted Encumbrances (including those Encumbrances
set forth in SCHEDULE 5.17). Upon delivery to Buyer on the Closing Date of the
instruments of transfer contemplated by SECTION 4.4, Sellers will thereby
transfer to Buyer good and marketable title to the Purchased Assets, subject to
no Encumbrances, except for Permitted Encumbrances.
5.18. EMPLOYEES AND RELATED AGREEMENTS; ERISA.
(a) SCHEDULE 5.18(A) sets forth a list of each written
retirement, savings, thrift, deferred compensation, severance, stock ownership,
stock purchase, stock option, performance, bonus, incentive, vacation or holiday
pay, hospitalization or other medical, disability, life or other insurance, or
other welfare, retiree welfare or benefit plan, policy, trust, understanding or
arrangement of any kind to which any Seller, with respect to the Business, is a
party or by which it is bound or pursuant to which it may be required to make
any payment at any time, other than plans of the type described in SECTION
5.18(d) ("Seller's Non-ERISA Plans").
(b) SCHEDULE 5.18(B) sets forth a list of each written (i)
employee collective bargaining agreement, and (ii) agreement, commitment,
understanding, plan, policy or arrangement of any kind, whether written or oral,
with or for the benefit of any current or former officer, director, employee or
consultant (including each employment, compensation, deferred compensation,
severance, supplemental pension, life insurance, termination or consulting
agreement or arrangement and any agreements or arrangements associated with a
change in control), to which any Seller, with respect to the Business, is a
party or by which it is bound or pursuant to which it may be required to make
any payment at any time, other than Seller's Non-
ERISA Plans and other than plans of the type described in SECTION 5.18(d)
("Seller's Compensation Commitments").
(c) Copies of all written Seller's Non-ERISA Plans and
Seller's Compensation Commitments and of all related insurance and annuity
policies and contracts and other documents with respect to each Seller's
Non-ERISA Plan and Seller's Compensation Commitment have been delivered to
Buyer. Seller is not bound by any oral Seller's Non-ERISA Plans or Seller's
Compensation Commitments.
(d) SCHEDULE 5.18(D) sets forth a list of each "employee
pension benefit plan" (as such term is defined in Section 3(2) of ERISA) and
each "employee welfare benefit plan" (as such term is defined in Section 3(1) of
ERISA) covering any employee or former employee of any Seller with respect to
the Business (collectively, "Seller's ERISA Plans"). Except as set forth in
SCHEDULE 5.18(D), none of the Sellers has ever maintained any employee pension
benefit plan with respect to the Business. None of the Sellers has ever been
required to contribute to any "multiemployer plan" (as such term is defined in
Section 3(37) of ERISA) with respect to the Business.
(e) Sellers have delivered to Buyer, with respect to each
Seller's ERISA Plan correct and complete copies, where applicable, of (i) all
plan documents and amendments, trust agreements and insurance and annuity
contracts and policies, (ii) the most recent IRS determination letter, (iii) the
summary plan description currently in use, and (iv) copies of correspondence
from the IRS, the Department of Labor or the Pension Benefit Guaranty
Corporation regarding any plan audit or investigation or any intent to conduct a
plan audit.
(f) Each Seller's ERISA Plan which is intended to qualify
under Section 401(a) of the Code has received a favorable determination letter
from the IRS that such Plan is so qualified under the Code; and, to the Seller's
knowledge, no circumstance exists which might cause such Plan to cease being so
qualified.
(g) Each Seller's ERISA Plan complies in all material
respects, and has been administered to comply, with all Requirements of Law, and
there has been no notice issued by any Governmental Body questioning or
challenging such compliance, and there are no actions, suits or claims (other
than routine claims for benefits) pending or, to each Seller's knowledge,
threatened involving any such Plan or the assets of any such Plan.
(h) None of the Sellers has any obligations under any of
Seller's Non-ERISA Plans, Seller's Compensation Commitments or Seller's ERISA
Plans or otherwise to provide health or death benefits to or in respect of
former employees of any Seller with respect to the Business, except as
specifically required by the continuation requirements of Part 6 of Title I of
ERISA or applicable state insurance laws.
(i) None of the Sellers, with respect to the Business, has any
liability pursuant to (i) any violation of the health care requirements of Part
6 of Title I of ERISA or Section 4980B of the Code, (ii) under Section 502(i) or
Section 502(l) of ERISA or Section 4975 of the Code, (iii) under Section 302 of
ERISA or Section 412 of the Code or (iv) under Title IV of ERISA.
(j) SCHEDULE 5.18(J) contains: (i) a list of all employees of
the Divisions as of July 1, 2000 whose then current annual compensation was in
excess of $50,000; (ii) the then current annual compensation of, and a
description of the fringe benefits (other than those generally available to
employees of Sellers) provided by Sellers to any such employees; (iii) a list of
all present or former employees of the Divisions whose annual salary in calendar
year 2000 will exceed $50,000 and who have terminated or given notice of their
intention to terminate their relationship with Sellers or the Divisions since
July 1, 2000; (iv) a list of any increase, effective after July 1, 2000 in the
rate of compensation of any employees or commission salespersons if such
increase exceeds 5% of the previous annual salary of such employee or commission
salesperson; and (v) a list of all substantial changes in job assignments of, or
arrangements with, or promotions or appointments of, any employees or commission
salespersons whose annual compensation for calendar year 2000 will exceed
$50,000.
(k) Except as set forth in SCHEDULE 5.18(K), (i) to the
knowledge of each Seller, neither Division is involved in any transaction or
other situation with any employee, officer, director or Affiliate of any Seller
which may be generally characterized as a "conflict of interest", including
direct or indirect interests in the business of competitors, suppliers or
customers of such Division, and (ii) to the knowledge of each Seller, there are
no situations with respect to the Business which involved or involves (A) the
use of any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses related to political activity; (B) the making of any
direct or indirect unlawful payments to government officials or others from
corporate funds or the establishment or maintenance of any unlawful or
unrecorded funds; (C) the violation of any of the provisions of The Foreign
Corrupt Practices Act of 1977, or any rules or regulations promulgated
thereunder; or (D) the receipt of any illegal discounts or rebates or any other
violation of the antitrust laws.
5.19. EMPLOYEE RELATIONS. Except as set forth in SCHEDULE
5.19, each Seller has complied in respect of the Business with all applicable
Requirements of Laws relating to prices, wages, hours, discrimination in
employment and collective bargaining and to the operation of the Business and is
not liable for any arrears of wages or any Taxes or penalties for failure to
comply with any of the foregoing. Sellers believe that their relations with the
employees of the Divisions are satisfactory. None of the Sellers is a party to,
and neither Division is affected by or, to the knowledge of any Seller,
threatened with, any dispute or controversy with a union or with respect to
unionization or collective bargaining involving the employees of such Division.
None of the Sellers nor either Division is adversely affected by any dispute or
controversy with a union or with respect to unionization or collective
bargaining involving any supplier or customer of such Division. SCHEDULE 5.19
sets forth a description of any union organizing or election activities
involving any non-union employees of either Division which have occurred since
December 31, 1999 or, to the knowledge of each Seller, are threatened as of the
date hereof.
5.20. CONTRACTS. Except as set forth in SCHEDULE 5.20 or any
other Schedule hereto, none of the Sellers is, with respect to the Business, a
party to or bound by:
(i) any contract for the purchase or sale of real property;
(ii) any contract for the purchase of services, materials,
supplies or equipment, which Sellers reasonably anticipate will involve
the payment of more than $10,000 in 2000 or which extends beyond
December 31, 2000;
(iii) any contract for the sale of goods or services, which
Sellers reasonably anticipate will involve the payment of more than
$10,000 in 2000 or which extends beyond December 31, 2000;
(iv) any contract for the purchase, licensing or development
of software to be used primarily by either Division;
(v) any consignment, distributor, dealer, manufacturers
representative, sales agency, advertising representative or advertising
or public relations contract;
(vi) any guarantee of the obligations of customers, suppliers,
officers, directors, employees, Affiliates or others;
(vii) any contract which limits or restricts where either
Division may conduct the Business or the type or line of business in
which either Division may engage;
(viii) any agreement which provides for, or relates to, the
incurrence by either Division of indebtedness for borrowed money
(including any interest rate or foreign currency swap, cap, collar,
hedge or insurance agreements, or options or forwards on such
agreements, or other similar agreements for the purpose of managing the
interest rate and/or foreign exchange risk associated with its
financing);
(ix) any contract not made in the ordinary course; or
(x) any other contract, agreement, commitment, understanding
or instrument which is material to either Division or the Business.
5.21. STATUS OF CONTRACTS. Except as set forth in SCHEDULE
5.21, each of the leases, contracts and other agreements listed in SCHEDULES
5.11, 5.14, 5.15, 5.18 and 5.20 (collectively, the "Seller Agreements")
constitutes a valid and binding obligation of each Seller that is a party
thereto and, to the Sellers' knowledge, each other party thereto and is in full
force and effect and (except as set forth in SCHEDULE 5.3 and except for those
Seller Agreements which by their terms will expire prior to the Closing Date or
are otherwise terminated prior to the Closing Date in accordance with the
provisions hereof) may be transferred to Buyer pursuant to this Agreement and
will continue in full force and effect thereafter, in each case without
breaching the terms thereof or resulting in the forfeiture or impairment of any
rights thereunder and without the consent, approval or act of, or the making of
any filing with, any other party. Each Seller has fulfilled and performed its
respective obligations under each of the Seller Agreements to which it is a
party, and no Seller is in, or alleged to be in, breach or default under any of
the Seller Agreements to which such Seller is a party, nor is there or is there
alleged to be any basis for termination of, any of the Seller Agreements and, to
the Sellers' knowledge, no other party to any of the Seller Agreements has
breached or defaulted thereunder, and, to the Sellers' knowledge, no event has
occurred and no condition or state of facts exists which, with the passage of
time or the giving of notice or both, would constitute such a default or breach
by
such Seller or by any such other party. No Seller is currently renegotiating any
of the Seller Agreements or paying liquidated damages in lieu of performance
thereunder. Complete and correct copies of each of the Seller Agreements have
heretofore been delivered to Buyer by Sellers.
5.22. NO VIOLATION OR LITIGATION. Except as set forth in
SCHEDULE 5.22:
(i) none of the Sellers, with respect to the Business, nor the
Purchased Assets are subject to any Court Order;
(ii) the Purchased Assets and their uses comply in all
material respects with all applicable Requirements of Laws and Court
Orders;
(iii) Sellers have complied with all Requirements of Laws and
Court Orders which are applicable to the Purchased Assets or the
Business;
(iv) there are no lawsuits, claims, suits, proceedings or
investigations pending or, to the knowledge of any Seller, threatened
against or affecting any Seller in respect of the Purchased Assets or
the Business nor, to the knowledge of each Seller, is there any basis
for any of the same, and there are no lawsuits, suits or proceedings
pending in which any Seller is the plaintiff or claimant and which
relate to the Purchased Assets or the Business;
(v) there is no action, suit or proceeding pending or, to the
knowledge of each Seller, threatened which questions the legality or
propriety of the transactions contemplated by this Agreement; and
(vi) to the knowledge of each Seller, no legislative or
regulatory proposal has been adopted or is pending which could
adversely affect the Business.
5.23. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE
5.23:
(i) the operations of the Business comply in all material
respects with all applicable Environmental Laws;
(ii) Sellers have, in respect of the Business, obtained all
environmental, health and safety Governmental Permits necessary for its
operation, and all such Governmental Permits are in good standing and
Sellers are in compliance with all terms and conditions of such
permits;
(iii) none of the Sellers, with respect to the Business, nor
any of the present Business Property or operations, or the past
Business Property or operations, is subject to any on-going
investigation by, order from or agreement with any Person (including
any prior owner or operator of Business Property) respecting (i) any
Environmental Law, (ii) any Remedial Action or (iii) any claim of
Losses and Expenses arising from the Release or threatened Release of a
Contaminant into the environment;
(iv) none of the Sellers is, with respect to the Business,
subject to any judicial or administrative proceeding, order, judgment,
decree or settlement alleging or addressing a violation of or liability
under any Environmental Law;
(v) none of the Sellers has with respect to the Business:
(A) reported a Release of a hazardous substance pursuant to
Section 103(a) of CERCLA, or any state equivalent;
(B) filed a notice pursuant to Section 103(c) of CERCLA;
(C) filed notice pursuant to Section 3010 of RCRA, indicating
the generation of any hazardous waste, as that term is
defined under 40 CFR Part 261 or any state equivalent; or
(D) filed any notice under any applicable Environmental Law
reporting a substantial violation of any applicable
Environmental Law;
(vi) there is not now, nor to the best knowledge of each
Seller has there ever been, on or in any Business Property:
(A) any treatment, recycling, storage or disposal of any
hazardous waste, as that term is defined under 40 CFR Part
261 or any state equivalent, that requires or required a
Governmental Permit pursuant to Section 3005 of RCRA; or
(B) any underground storage tank or surface impoundment or
landfill or waste pile.
(vii) there is not now on or in any Business Property any
polychlorinated biphenyls (PCB) used in pigments, hydraulic oils,
electrical transformers or other equipment;
(viii) none of the Sellers has received any notice or claim to
the effect that it is or may be liable to any Person as a result of the
Release or threatened Release of a Contaminant;
(ix) no Environmental Encumbrance has attached to any Business
Property; and
(x) any asbestos-containing material which is on or part of
any Business Property is in good repair according to the current
standards and practices governing such material, and its presence or
condition does not violate any currently applicable Environmental Law.
5.24. INSURANCE. SCHEDULE 5.24 sets forth a list and brief
description (including nature of coverage, limits, deductibles, and premiums for
the current fiscal year with respect to each type of coverage) of all policies
of insurance maintained, owned or held by any Seller on
the date hereof with respect to the Purchased Assets or the Business. Sellers
shall keep or cause such insurance or comparable insurance to be kept in full
force and effect through the Closing Date. Sellers have complied with each of
such insurance policies and have not failed to give any notice or present any
claim thereunder in a due and timely manner. Sellers have delivered to Buyer
correct and complete copies of the most recent inspection reports, if any,
received from insurance underwriters as to the condition of the Purchased
Assets.
5.25. SUPPLIERS. SCHEDULE 5.25 sets forth a list of names and
addresses of the ten largest suppliers (measured by dollar volume of purchases)
of each Division and the percentage of the Business which each such supplier
represents or represented during the period from January 1, 2000 through the
Balance Sheet Date. Except as set forth in SCHEDULE 5.25, there exists no actual
or, to the Sellers' knowledge, threatened termination, cancellation or
limitation of, or any modification or change in, the business relationship of
any Seller with any supplier or group of suppliers listed in SCHEDULE 5.25, or
whose sales individually or in the aggregate are material to the operations of
the Business, and there exists no present condition or state of facts or
circumstances involving suppliers which any Seller can now reasonably foresee
would materially adversely affect the Business or prevent the conduct of the
Business after the consummation of the transactions contemplated by this
Agreement in essentially the same manner in which it has heretofore been
conducted.
5.26. BUDGETS. SCHEDULE 5.26 sets forth (i) as of the date
hereof the budgets of capital, payroll and other expenditures of each Division
prepared in the ordinary course of the Business for the fiscal year ending
December 31, 2000 and (ii) the total budgeted capital expenditures through
December 31, 2000, if any, for each capital expenditure project for which funds
are proposed to be expended during 2000.
5.27. NO FINDER. None of the Sellers nor any Person acting on
any of their behalves has paid or become obligated to pay any fee or commission
to any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
5.28. DISCLOSURE. None of the representations or warranties of
any Seller contained herein, none of the information contained in the Schedules
referred to in ARTICLE V, and none of the other information or documents
furnished to Buyer or any of its representatives by any Seller or its
representatives pursuant to the terms of this Agreement, is false or misleading
in any material respect or omits to state a fact herein or therein necessary to
make the statements herein or therein not misleading in any material respect.
There is no fact which adversely affects or in the future is likely to adversely
affect the Purchased Assets or the Business in any material respect which has
not been set forth or referred to in this Agreement or the Schedules hereto.
5.29. FINANCIAL PROJECTIONS. Sellers have made available to
Buyer certain financial projections with respect to the Business, which
projections were prepared for internal use only. Sellers makes no representation
or warranty regarding the accuracy of such projections or as to whether such
projections will be achieved or otherwise, except that each Seller represents
and warrants that such projections were prepared in good faith and are based on
assumptions believed by it to be reasonable.
5.30. TERMINATION OF LIENS. UCC-3 Termination Statements have
been filed with respect to any liens on any of the Purchased Assets in favor of
LaSalle National Bank.
5.31. CREDITOR LIST. The list of creditors which was delivered
to Buyer pursuant to SECTION 9.8 of this Agreement is true and correct and
accurately reflects the information required to be stated therein.
5.32. FAIRNESS OPINION. The Boards of Directors of Sellers
have received a written opinion of Xxxxxxx & Company, Inc. (the "Fairness
Opinion") indicating that the consideration being paid for the Purchased Assets
represents at least the fair market value of such assets.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to each Seller to enter into this Agreement
and to consummate the transactions contemplated hereby, Buyer hereby represents
and warrants to each Seller and agrees as follows:
6.1. ORGANIZATION OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full power and authority to own or lease and to operate and use
its properties and assets and to carry on its business as now conducted.
6.2. AUTHORITY OF BUYER.
(a) Buyer has full power and authority to execute, deliver and
perform this Agreement and all of the Buyer Ancillary Agreements. The execution,
delivery and performance of this Agreement and the Buyer Ancillary Agreements by
Buyer have been duly authorized and approved by Buyer's board of directors and
do not require any further authorization or consent of Buyer or its
stockholders. This Agreement has been duly authorized, executed and delivered by
Buyer and is the legal, valid and binding agreement of Buyer enforceable in
accordance with its terms, except as such legality, validity, binding effect or
enforcement may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally or by equitable principles relating to the
availability of remedies and each of the Buyer Ancillary Agreements has been
duly authorized by Buyer and upon execution and delivery by Buyer will be a
legal, valid and binding obligation of Buyer enforceable in accordance with its
terms, except as such legality, validity, binding effect or enforcement may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally or by equitable principles relating to the availability of remedies.
(b) Neither the execution and delivery of this Agreement or
any of the Buyer Ancillary Agreements or the consummation of any of the
transactions contemplated hereby or thereby nor compliance with or fulfillment
of the terms, conditions and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or a
loss of rights under (A) the Certificate of Incorporation or by-laws of
Buyer, (B) any material note, instrument, agreement, mortgage, lease,
license, franchise, permit or other authorization, right, restriction
or obligation to which Buyer is a party or any of its properties is
subject or by which Buyer is bound, (C) any Court Order to which Buyer
is a party or by which it is bound or (D) any Requirements of Laws
affecting Buyer; or
(ii) require the approval, consent, authorization or act of,
or the making by Buyer of any declaration, filing or registration with,
any Person.
6.3. NO FINDER. Neither Buyer nor any Person acting on its
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement.
ARTICLE VII
ACTION PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to take the
following actions between the date hereof and the Closing Date:
7.1. INVESTIGATION OF THE DIVISION BY BUYER. Sellers shall
afford and cause the Divisions to afford to the officers, employees and
authorized representatives of Buyer (including independent public accountants
and attorneys) complete access during normal business hours to the offices,
properties, employees and business and financial records (including computer
files, retrieval programs and similar documentation and such access and
information that may be necessary in connection with an environmental audit) of
the Divisions to the extent Buyer shall deem necessary or desirable and shall
furnish to Buyer or its authorized representatives such additional information
concerning the Purchased Assets, the Business and the operations of the
Divisions as shall be reasonably requested, including all such information as
shall be necessary to enable Buyer or its representatives to verify the accuracy
of the representations and warranties contained in this Agreement, to verify
that the covenants of Sellers contained in this Agreement have been complied
with and to determine whether the conditions set forth in ARTICLE IX have been
satisfied. Buyer agrees that such investigation shall be conducted in such a
manner as not to interfere unreasonably with the operations of Sellers or the
Divisions. No investigation made by Buyer or its representatives hereunder shall
affect the representations and warranties of any Seller hereunder.
7.2. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each
of the parties hereto shall refrain from taking any action which would render
any representation or warranty contained in ARTICLE V or VI of this Agreement
inaccurate as of the Closing Date. Each party shall promptly notify the other of
any action, suit or proceeding that shall be instituted or threatened against
such party to restrain, prohibit or otherwise challenge the legality of any
transaction contemplated by this Agreement. Sellers shall promptly notify Buyer
of any lawsuit,
claim, proceeding or investigation that may be threatened, brought, asserted or
commenced against any Seller which would have been listed in SCHEDULE 5.22 if
such lawsuit, claim, proceeding or investigation had arisen prior to the date
hereof.
7.3. CONSENTS OF THIRD PARTIES; GOVERNMENTAL APPROVALS.
(a) Sellers will act diligently and reasonably to obtain,
before the Closing Date, the consent, approval or waiver, in form and substance
reasonably satisfactory to Buyer, from any party to any Seller Agreement
required to be obtained to assign or transfer any such Agreements to Buyer or to
otherwise satisfy the conditions set forth in SECTION 9.5; PROVIDED that none of
Sellers nor Buyer shall have any obligation to offer or pay any consideration in
order to obtain any such consents or approvals; and PROVIDED, FURTHER, that
Sellers shall not make any agreement or understanding affecting the Purchased
Assets or the Business as a condition for obtaining any such consents or waivers
except with the prior written consent of Buyer. During the period prior to the
Closing Date, Buyer shall act diligently and reasonably to cooperate with
Sellers to obtain the consents, approvals and waivers contemplated by this
SECTION 7.3(a).
(b) During the period prior to the Closing Date, Sellers and
Buyer shall act diligently and reasonably, and shall cooperate with each other,
to obtain any consents and approvals of any Governmental Body required to be
obtained by them in order to assign or transfer any Governmental Permits to
Buyer, to permit the consummation of the transactions contemplated by this
Agreement, or to otherwise satisfy the conditions set forth in SECTION 9.4;
PROVIDED that Sellers shall not make any agreement or understanding affecting
the Purchased Assets or the Business as a condition for obtaining any such
consents or approvals except with the prior written consent of Buyer.
7.4. OPERATIONS PRIOR TO THE CLOSING DATE.
(a) Sellers shall operate and carry on the Business only in
the ordinary course and substantially as presently operated. Consistent with the
foregoing, Sellers shall keep and maintain the Purchased Assets in good
operating condition and repair and shall use each of their reasonable best
efforts consistent with good business practice to maintain the business
organization of the Divisions intact and to preserve the goodwill of the
suppliers, contractors, licensors, employees, customers, distributors and others
having business relations with the Business. In connection therewith, Sellers
shall not (i) transfer or cause to be transferred from either Division any
employee or agent thereof, (ii) offer employment after the Closing Date to any
such employee or agent or (iii) otherwise attempt to persuade any such person to
terminate his or her relationship with either Division.
(b) Notwithstanding SECTION 7.4(a), except as expressly
contemplated by this Agreement or except with the express written approval of
Buyer, none of the Sellers shall:
(i) make any change in the Business or the operations of
either Division or make any expenditure in respect of either Division
which shall exceed the amount, as set forth in SCHEDULE 5.26, budgeted
therefor;
(ii) make any capital expenditure with respect to either
Division or enter into any contract or commitment therefor, other than
capital expenditures or commitments for capital expenditures referred
to in the applicable budget contained in SCHEDULE 5.26;
(iii) except as contemplated by SCHEDULE 5.26, enter into any
contract, agreement, undertaking or commitment which would have been
required to be set forth in Schedule 5.20 if in effect on the date
hereof or enter into any contract with respect to the Business which
cannot be assigned to Buyer or a permitted assignee of Buyer under
SECTION 13.5;
(iv) enter into any contract for the purchase of real property
to be used by either Division or for the sale of any Owned Real
Property or exercise any option to purchase real property listed in
SCHEDULE 5.10 or any option to extend a lease listed in SCHEDULE 5.11;
(v) sell, lease (as lessor), transfer or otherwise dispose of
(including any transfers from either Division to any Seller or any of
its respective Affiliates), or mortgage or pledge, or impose or suffer
to be imposed any Encumbrance on, any of the Purchased Assets, other
than inventory and minor amounts of personal property sold or otherwise
disposed of for fair value in the ordinary course of the Business
consistent with past practice and other than Permitted Encumbrances;
(vi) cancel any debts owed to or claims held by either
Division (including the settlement of any claims or litigation) other
than in the ordinary course of the Business consistent with past
practice;
(vii) create, incur or assume, or agree to create, incur or
assume, any indebtedness for borrowed money in respect of either
Division (other than money borrowed or advances from any Seller or any
of its respective Affiliates in the ordinary course of the Business
consistent with past practice) or enter into, as lessee, any
capitalized lease obligations (as defined in Statement of Financial
Accounting Standards No. 13);
(viii) accelerate or delay collection of any notes or accounts
receivable generated by the Business in advance of or beyond their
regular due dates or the dates when the same would have been collected
in the ordinary course of the Business consistent with past practice;
(ix) delay or accelerate payment of any account payable or
other liability of the Business beyond or in advance of its due date or
the date when such liability would have been paid in the ordinary
course of the Business consistent with past practice;
(x) allow the levels of raw materials, supplies,
work-in-process or other materials included in the inventory of either
Division to vary in any material respect from the levels customarily
maintained in the Business;
(xi) make, or agree to make, any payment of cash or
distribution of assets to any Seller or any of its respective
Affiliates (other than cash realized upon collection of receivables
generated in the ordinary course of the Business);
(xii) institute any increase in any profit-sharing, bonus,
incentive, deferred compensation, insurance, pension, retirement,
medical, hospital, disability, welfare or other employee benefit plan
with respect to employees of either Division;
(xiii) make any change in the compensation of the employees of
either Division, other than changes made in accordance with normal
compensation practices and consistent with past compensation practices;
(xiv) prepare or file any Tax Return inconsistent with past
practice or, on any such Tax Return, take any position, make any
election, or adopt any method that is inconsistent with positions
taken, elections made or methods used in preparing or filing similar
Tax Returns in prior periods (including positions, elections or methods
which would have the effect of deferring income to periods for which
Buyer is liable pursuant to SECTION 8.3(a) or accelerating deductions
to periods for which any Seller is liable pursuant to SECTION 8.3(a));
or
(xv) make any change in the accounting policies applied in the
preparation of the financial statements contained in SCHEDULE 5.4.
7.5. NOTIFICATION BY SELLERS OF CERTAIN MATTERS. During the
period prior to the Closing Date, Sellers will promptly advise Buyer in writing
of (i) any material adverse change in the condition of the Purchased Assets or
the Business, (ii) any notice or other communication from any third Person
alleging that the consent of such third Person is or may be required in
connection with the transactions contemplated by this Agreement, and (iii) any
material default under any Seller Agreement or event which, with notice or lapse
of time or both, would become such a default on or prior to the Closing Date and
of which any Seller has knowledge.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1. COVENANT NOT TO COMPETE OR SOLICIT BUSINESS.
(a) In furtherance of the sale of the Purchased Assets and the
Business to Buyer hereunder by virtue of the transactions contemplated hereby
and more effectively to protect the value and goodwill of the Purchased Assets
and the Business so sold, each Seller covenants and agrees that, for a period
ending on the first anniversary of the Closing Date, none of the Sellers or any
of their respective subsidiaries or parent entities (each, a "Related Party")
will:
(i) directly or indirectly (whether as principal, agent,
independent contractor, partner or otherwise) own, manage, operate,
control, participate in, perform services for,
sell materials to, or otherwise carry on, a business similar to or
competitive with the business of Internet-based ordering and delivery
of groceries and other consumer goods anywhere in the Chicago, Illinois
MSA or the Washington, D.C. MSA, or
(ii) enter into any such relationship and shall not induce or
attempt to persuade, any employee, agent or customer of either Division
to terminate its employment, agency or business relationship with Buyer
or its Affiliates;
PROVIDED, HOWEVER, that nothing set forth in this SECTION 8.1 shall prohibit
Sellers or their respective Related Parties from owning not in excess of 5% in
the aggregate of any class of capital stock of any corporation if such stock is
publicly traded and listed on any national or regional stock exchange or on the
NASDAQ national market; PROVIDED, FURTHER, that the performance by Sellers of
the Transition Services pursuant to SECTION 8.9 shall not be deemed a violation
of this SECTION 8.1(a). In addition, each Seller covenants and agrees that it
will not, and will not permit any of its Affiliates to, divulge or make use of
any trade secrets or other confidential information of the Business other than
to disclose such secrets and information to Buyer or its Affiliates.
(b) If any Seller or any Related Party of thereof violates any
of its obligations under this SECTION 8.1, Buyer may proceed against it in law
or in equity for such damages or other relief as a court may deem appropriate.
Sellers acknowledge that a violation of this SECTION 8.1 may cause Buyer
irreparable harm which may not be adequately compensated for by money damages.
Sellers therefore agree that in the event of any actual or threatened violation
of this SECTION 8.1, Buyer shall be entitled, in addition to other remedies that
it may have, to a temporary restraining order and to preliminary and final
injunctive relief against such Seller or such Related Party thereof to prevent
any violations of this SECTION 8.1, without the necessity of posting a bond. The
prevailing party in any action commenced under this SECTION 8.1 shall also be
entitled to receive reasonable attorneys' fees and court costs. It is the intent
and understanding of each party hereto that if, in any action before any court
or agency legally empowered to enforce this SECTION 8.1, any term, restriction,
covenant or promise in this SECTION 8.1 is found to be unreasonable and for that
reason unenforceable, then such term, restriction, covenant or promise shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency.
8.2. SELLERS' GRANT OF LIMITED RIGHT TO USE NAME.
(a) The Sellers hereby grant to Buyer and its Affiliates the
limited, worldwide, nonexclusive, irrevocable, royalty-free, nontransferable,
personal right and license through and including November 15, 2000, and no
longer, to use the "Streamline" trade name and the other Trademarks listed on
SCHEDULE 8.2. Such Trademarks shall be utilized only in connection with the
operation of the Business and only in a manner consistent with the operation of
the Business immediately prior to the Closing.
(b) The quality of Buyer's use of such Trademarks shall be
commensurate with that established by Sellers prior to the Closing Date. Buyer
agrees that any use of the Trademarks shall bear a legal notice in such form as
may be prescribed by law.
(c) Buyer agrees to cooperate with Sellers, at Sellers'
request and expense, in protecting, maintaining, enforcing, and defending such
Trademarks, including providing any materials or information and executing any
documents. Buyer agrees that it shall not at any time, without the prior consent
of Sellers, apply for any trademark protection of any of the Trademarks or file
any application or other document with any governmental authority or take any
other action which could affect or is inconsistent with Sellers' ownership of
the Trademarks or abet any third party in doing so.
(d) Except as otherwise permitted in this SECTION 8.2, on
November 15, 2000, Buyer shall cease all use of the Trademarks and all rights
granted to Buyer hereunder shall cease and shall forthwith revert to Seller.
(e) Sellers hereby grant, for a period of six months after the
Closing Date, a worldwide, transferable, irrevocable royalty-free right and
license to Buyer and its Affiliates to refer to the Business, but not any other
business or operations of Buyer or any of its Affiliates, as "formerly
Xxxxxxxxxx.xxx" and to use such reference in advertising or in the description
or name of any service or product from time to time purchased, processed,
manufactured or sold by Buyer and its affiliates in continuation of the
Business. Buyer and its affiliates shall have the further worldwide,
transferable, irrevocable royalty-free right and license from and after the
Closing Date to sell or otherwise use or dispose of any materials included in
the inventory of either Division and that bear the name "Streamline" alone or in
combination with other words if such materials (i) were included in the
Purchased Assets, (ii) are returned to Buyer or its affiliates after the Closing
Date, or (iii) were contracted for by any Seller prior to the Closing Date;
PROVIDED that, in connection with any such use or disposition, Buyer and/or any
applicable Affiliates are clearly identified as the party using or disposing of
any such materials; and FURTHER PROVIDED that such right shall terminate six
months after the Closing Date with respect to any such materials unless the only
reference therein to Seller is to its claim of copyright ownership, in which
case such right shall be unlimited as to time. Buyer and its Affiliates shall
also have the worldwide, transferable, irrevocable royalty-free right and
license from and after the Closing Date to use, for a period of six months
following the Closing Date, any signs, letterhead, invoices or other supplies
that bear the name "Streamline" alone or in combination with other words if such
signs, letterhead, invoices or supplies (a) were included in the Purchased
Assets, or (b) were contracted for by any Seller prior to the Closing Date;
PROVIDED that, in connection with any such use, Buyer and/or any applicable
Affiliates are clearly identified as the party using any such materials.
(f) In the event Buyer or any Affiliate of Buyer violates any
of its obligations under this SECTION 8.2, any Seller may proceed against it in
law or in equity for such damages or other relief as a court may deem
appropriate. Buyer acknowledges that violation of this SECTION 8.2 may cause
Sellers irreparable harm which may not be adequately compensated for by money
damages. Buyer, therefore, agrees that in the event of any violation of this
SECTION 8.2, each Seller shall be entitled, in addition to other remedies that
it may have, to seek preliminary and final injunctive relief against Buyer or
such Affiliate of Buyer to prevent any violations of this SECTION 8.2. The
prevailing party in any action commenced under this SECTION 8.2 shall also be
entitled to receive reasonable attorneys' fees and court costs. It is the intent
and understanding of each party hereto that if, in any action before any court
or agency legally empowered to enforce this SECTION 8.2, any term, restriction,
covenant or promise in this SECTION 8.2 is found to
be unreasonable and for that reason unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency.
8.3. TAXES.
(a) Sellers shall be jointly and severally liable for and pay,
and pursuant to ARTICLE XI shall indemnify Buyer against, all Taxes (whether
assessed or unassessed) applicable to the Business, the Purchased Assets and the
Assumed Liabilities, in each case attributable to taxable years or periods
ending on or prior to the Closing Date and, with respect to any Straddle Period,
the portion of such Straddle Period ending on and including the Closing Date.
Buyer shall be liable for and shall pay all Taxes (whether assessed or
unassessed) applicable to the Business, the Purchased Assets and the Assumed
Liabilities that are attributable to taxable years or periods beginning after
the Closing Date and, with respect to any Straddle Period, the portion of such
Straddle Period beginning after the Closing Date; provided, that Buyer shall not
be liable for any Taxes for which Sellers are liable under this Agreement
(including by reason of SECTION 5.7). For purposes of this SECTION 8.3, any
Straddle Period shall be treated on a "closing of the books" basis as two
partial periods, one ending at the close of the Closing Date and the other
beginning on the day after the Closing Date, except that Taxes (such as property
Taxes) imposed on a periodic basis shall be allocated on a daily basis.
(b) Notwithstanding SECTION 8.3(a), any sales Tax, use Tax,
real property transfer or gains Tax, documentary stamp Tax or similar Tax
attributable to the sale or transfer of the Business, the Purchased Assets or
the Assumed Liabilities shall be paid by Sellers. Buyer agrees to timely sign
and deliver such certificates or forms as may be necessary or appropriate to
establish an exemption from (or otherwise reduce), or file Tax Returns with
respect to, such Taxes.
(c) Sellers or Buyer, as the case may be, shall provide
reimbursement for any Tax paid by one party all or a portion of which is the
responsibility of the other party in accordance with the terms of this SECTION
8.3. Within a reasonable time prior to the payment of any said Tax, the party
paying such Tax shall give notice to the other party of the Tax payable and the
portion which is the liability of each party, although failure to do so will not
relieve the other party from its liability hereunder.
(d) After the Closing Date, each of the Sellers and Buyer
shall (and cause their respective Affiliates to):
(i) assist the other party in preparing any Tax Returns which
such other party is responsible for preparing and filing;
(ii) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns of the
Business or the Purchased Assets;
(iii) make available to the other and to any taxing authority
as reasonably requested all information, records, and documents
relating to Taxes of the Business or the Purchased Assets;
(iv) provide timely notice to the other in writing of any
pending or threatened Tax audits or assessments relating to Taxes of
the Business or the Purchased Assets for taxable periods for which the
other may have a liability under this SECTION 8.3; and
(v) furnish the other with copies of all correspondence
received from any taxing authority in connection with any Tax audit or
information request with respect to any such taxable period.
(e) Notwithstanding anything to the contrary in this
Agreement, the obligations of the parties set forth in this SECTION 8.3 shall be
unconditional and absolute and shall remain in effect without limitation as to
time.
8.4. DISCHARGE OF DIVISIONS' LIABILITIES. Each Seller
covenants and agrees that it will pay and discharge each and every liability and
obligation of such Seller in respect of the Business or the Purchased Assets
arising from events occurring on or prior to the Closing Date, except for those
liabilities and obligations expressly assumed by Buyer at the Closing pursuant
to instruments of assumption delivered to Sellers at the Closing, it being
understood and agreed that Buyer is assuming no liabilities or obligations of
any Seller other than liabilities and obligations so expressly assumed by Buyer.
8.5. EMPLOYEES AND EMPLOYEE BENEFIT PLANS. (a) During the
period beginning on the Closing Date and ending on September 30, 2000, Sellers
shall make available the services of its employees who are employed in the
Divisions to Buyer or its affiliates as leased employees (the "Leased
Employees"). During such period, Sellers shall pay and provide to all Leased
Employees compensation and benefits equal to that which they were receiving
immediately prior to the Closing Date (except to the extent otherwise required
by applicable law). The Leased Employees shall be deemed for all purposes
(including compensation, employee benefits, employment tax and reporting
obligations, and all obligations arising as a result of the termination of a
Leased Employee's employment) to be employees solely of Seller or its affiliates
and not to be employees of Buyer or any of its affiliates. Sellers shall have
responsibility for the employment and daily supervision of the Leased Employees;
PROVIDED, HOWEVER, that Sellers shall consult with Buyer regarding the nature
and scope of the services required by Buyer and the performance of such services
by the Leased Employees, and PROVIDED FURTHER, that Sellers shall not, and shall
cause their affiliates not to, undertake any actions in connection with the
provision of such services that are not authorized by Buyer. Buyer shall
reimburse each Seller for its direct payroll costs, excluding overhead expenses,
within one business day after receiving a copy of Sellers' payroll reports from
Sellers' payroll agent. Buyer shall also reimburse each Seller for other
reasonable direct costs of providing such leased employee services, including
payroll taxes, the costs of workers' compensation insurance and costs related to
Seller's Non-ERISA Plans listed on SCHEDULE 5.18(A), other than costs related to
any equity-based compensation plans (excluding the fees of third party
administrators under any employee benefit plan maintained by a Seller and costs
associated with the provision of the Accounting Services set forth on ANNEX B
hereto). Notwithstanding any other provision herein, Buyer shall not reimburse
any Seller for any payment or benefit under an employee benefit plan,
arrangement or agreement except to the extent it is set forth on SCHEDULE 2.3(D)
or SCHEDULE 5.18 and was provided to Buyer prior to the date hereof. Immediately
following the Employment Date as defined in SECTION 8.5(b), Sellers shall submit
to Buyer for payment a billing invoice or
other statement setting forth the amount of any fees for the leased employee
services provided hereunder, reduced by any fees or expenses heretofore paid by
Buyer. Such invoice or statement shall be accompanied by such supporting detail
as Buyer may reasonably request with respect to any of such fees. Payment by
Buyer to Sellers in respect of such invoice or statement shall be made within 15
days after the date of Buyer's receipt of such invoice or statement. Buyer shall
have the right to conduct an audit of Sellers to determine the accuracy of the
accounting for any such fees, the cost of which shall be borne by Buyer;
PROVIDED, HOWEVER, that if the results of any such audit show excess charges for
fees of more than $5,000 in the aggregate, then the cost of such audit shall be
borne by Sellers and Sellers shall promptly reimburse Buyer for all overcharges
due to excess charges for such fees.
(b) Effective on October 1, 2000 (the "Employment Date"),
Buyer will offer employment to the employees of the Divisions listed on SCHEDULE
8.5 who remain actively employed as Leased Employees immediately prior to the
Employment Date. Such Employees who are extended and accept offers of employment
from Buyer shall become employees of Buyer as of the Employment Date (the
"Continuing Employees"). Buyer in its sole discretion may terminate any
Continuing Employee at any time after the Employment Date.
(c) Except as specifically set forth herein, Buyer shall not
assume any obligations for any employee benefit plan maintained by, or
contributed to by, Seller or any Seller Group Member ("Seller Plans") or for any
other obligations of Seller or any Seller Group Member with respect to their
employees or former employees. Seller will fully provide or pay for all
liabilities or obligations to the Continuing Employees arising on or before the
Employment Date under any Seller Plans or any other employee benefit
arrangements (including, without limitation, insurance, disability and other
programs), including all vested benefits accrued under the Seller Plans up to
the Employment Date, and for such purposes shall fully vest each Continuing
Employee with all benefits accrued for such Continuing Employee under any Seller
Plan that is a "pension plan" as defined in Section 3(2) of ERISA through such
date. Seller shall provide continuation coverage to each individual who under
the terms of Seller's health plan is entitled to continuation rights pursuant to
Code Section 4980B or Part 6 of Subtitle I of ERISA. Buyer shall assume
obligations for any Continuing Employee's accrued but unused vacation days and
sick days and accrued but unpaid regular salary, except to the extent a
Continuing Employee becomes entitled to a payment for accrued but unused
vacation days or sick days on account of such Continuing Employee's termination
of employment with a Seller.
(d) Seller shall bear the cost and expense of any workers'
compensation claim asserted and arising out of an injury sustained by any
Continuing Employee prior to the Employment Date.
(e) Buyer, a successor employer for federal, state and local
withholding and employment Taxes, shall assume Seller's responsibilities as
predecessor employer for filing all federal, state and local withholding income
Tax and employment Tax Returns and to furnish for the 2000 calendar year Forms
W-2 and similar forms relating to all Continuing Employees for the calendar year
in which the Employment Date occurs that are due after the Employment Date.
Buyer shall assume such responsibility in accordance with the alternative
procedure described in Section 5 of Revenue Procedure 96-60 and, for the
calendar year in which the Employment Date occurs, shall assume Seller's
obligations to furnish Forms W-2 to all Continuing Employees.
Seller shall comply with all of the requirements set forth in such alternative
procedure that are imposed on a predecessor employer and Buyer shall comply with
all of the requirements set forth in such procedure that are imposed on a
successor employer. Seller shall provide information and data to Buyer upon
request with respect to the wages of Continuing Employees and related payroll
Taxes for the calendar year in which the Employment Date occurs through the last
regular wage payment prior to the Employment Date in order for Buyer to file
timely and proper Tax Returns and forms for the calendar year in which the
Employment Date occurs.
(f) As of the Employment Date, Continuing Employees shall be
eligible to participate in the employee benefit plans maintained by Buyer for
similarly situated employees. Buyer will take into account service of Continuing
Employees on behalf of the Division prior to the Employment Date and treat such
service as service with Buyer for purposes of determining such employees'
eligibility for holidays, sick days and vacation benefits and for participation
and vesting purposes under any other employee benefit plans, programs, policies
or arrangements covering such Continuing Employees established, continued or
otherwise sponsored by Buyer after the Employment Date. Except as otherwise set
forth herein, Buyer may modify or terminate any employee benefit plan, program,
policy or arrangement covering Continuing Employees at any time after the
Employment Date in accordance with standard business practices. Continuing
Employees shall participate in any group health plan maintained by Buyer for
such employees without any waiting periods, without any evidence of
insurability, and without application of any pre-existing condition limitations,
except to the extent applicable under the plans sponsored by Seller immediately
prior to the Employment Date. Buyer shall count claims arising prior to the
Employment Date for purposes of deductibles, out-of-pocket maximums, benefit
maximums, and all other similar limitations for calendar year 2000 to the same
extent as applicable under Seller's plans as in effect immediately prior to the
Employment Date. As soon as practicable after the Employment Date, Sellers shall
provide Buyer with all employment and employee benefits data necessary for Buyer
to comply with its obligations under this SECTION 8.5.
(g) Except as otherwise provided in SECTION 8.5(c), Seller
shall be responsible for the costs and consequences associated with the
termination of any employee of a Seller who does not become a Continuing
Employee for any reason. In the event any Continuing Employee shall be legally
entitled to an amount in the nature of termination benefits or costs as a result
of the termination of his or her employment with Seller in connection with the
transactions contemplated by this Agreement notwithstanding that such Continuing
Employee is not terminated by Buyer or does not resign from Buyer, Seller shall
reimburse Buyer for any such benefits or costs paid by Buyer as a result of the
termination by Seller.
(h) Nothing in this Agreement, express or implied, shall
confer upon any employee of Seller or any of its Affiliates, or any
representative of any such employee, any rights or remedies, including any right
to employment or continued employment for any period of any nature whatsoever.
8.6. CHANGE IN CORPORATE NAME. Beacon agrees promptly after
the Closing Date to change its d/b/a name to a name that does not include the
words "Scotty's," "Scotty's Market" or "Scotty's Home Market," or any variation
thereof.
8.7. COVENANT NOT TO XXX; GENERAL RELEASE. Buyer and Sellers
agree and covenant not to commence any action, arbitration or other claim or
dispute based upon, arising out of or relating in any way to Buyer's interest in
any transaction with Parent prior to the date hereof], the failure of any such
transaction to occur or the parties' negotiations with respect to any such
transaction, except as otherwise provided herein. In the event that Buyer or any
Seller breaches this provision by commencing an action, arbitration or other
claim or dispute, then such breaching party shall be responsible for paying all
reasonable attorneys' fees and costs of the non-breaching party. For purposes of
this SECTION 8.7 only, Affiliates of Buyer and Affiliates of any Seller shall be
deemed to be third party beneficiaries. Sellers shall also use their reasonable
best efforts to obtain from each of the Major Stockholders a Major Stockholders
Release.
8.8. USE OF PROCEEDS. Each Seller agrees that it will not use
any proceeds it receives from the sale of the Purchased Assets for
distributions, dividends or any other payments to equityholders of such Seller
unless and until all obligations of such Seller to each of its creditors have
been satisfied in full.
8.9. TRANSITION SERVICES. (a) To assist in ensuring the
continuous and uninterrupted operation of the Business, each of the Sellers
will, and will cause their respective affiliates to, provide Buyer with
transition services as requested by Buyer for the categories of services listed
on ANNEX A and any associated services and in any event all of the services
described on ANNEX A (the "Transition Services") until (i) the earlier of (x)
such time as Buyer is reasonably able to provide such services to the Business
itself or Buyer shall have contracted with third parties to provide such
services to the Business, in each case without interruption to the Business or
(y) the completion by Sellers of transition services for grocery deliveries made
by Buyer through November 15, 2000; or (ii) such later period that is specified
in ANNEX A; such period being the "Transition Period". Buyer shall use
commercially reasonable efforts to take such appropriate action, so that Buyer
will, with the passage of time, be able to perform or have performed for itself
certain accounting related services identified in ANNEX A. Buyer shall keep
Seller generally informed of its plans in this regard in order for Sellers to
make any appropriate adjustments in Sellers' staffing and hiring plans.
(b) Each Seller shall, and shall cause its affiliates to,
provide such Transition Services in good faith, in a professional and
workmanlike manner and on a basis consistent with the usual standards for the
provision of such Transition Services or similar services by Seller to its own
customers.
(c) All employees and representatives of any Seller or its
affiliates providing the Transition Services hereunder to Buyer and its
affiliates shall be deemed for all purposes (including compensation and employee
benefits) to be employees or representatives solely of such Seller or its
affiliates and not to be employees or representatives of Buyer or any of its
affiliates or to be independent contractors thereof. Notwithstanding the fact
that performance of the Transition Services shall be under the direction of
Buyer, in performing their respective duties hereunder, all employees and
representatives of any Seller or its affiliates shall be under the direction,
control and supervision of such Seller (and not of Buyer or its affiliates).
Nothing herein contained shall be deemed or construed by the parties hereto or
for any other party as creating the relationship of principal and agent or of
partnership or joint venture by the parties hereto. None of Sellers nor any of
their respective affiliates shall take title to or otherwise
acquire any lien or other interest in any of Buyer's assets or properties in
connection with the provision of the Transition Services, and each Seller and
its affiliates shall hold all such assets and properties only for the benefit of
Buyer.
(d) Buyer shall have the sole authority to direct the manner
in which the Transition Services are performed, including approving the content
of any communications to customers or suppliers of the Business. In connection
with the provision of Transition Services involving communications with
customers, Buyer, at its option, may script all communications of Sellers and
their affiliates, and Sellers shall, and shall cause their affiliates to, follow
any such script(s). Sellers shall not, and shall cause their affiliates not to,
undertake any actions in connection with the provision of Transition Services
that are not authorized by Buyer.
(e) Buyer shall reimburse each Seller for its reasonable
direct costs of providing the Transition Services as reflected in an estimated
budget to be mutually agreed upon by Sellers and Buyer. Sellers shall on a
monthly basis submit to Buyer for payment a billing invoice or other statement
setting forth the amount of any fees for the Transition Services not theretofore
paid by Buyer. Each such invoice or statement shall be accompanied by such
supporting detail as Buyer may reasonably request with respect to any of such
fees. Payment by Buyer to Sellers in respect of any such invoice or statement
shall be made within 15 days after the date of Buyer's receipt of such invoice
or statement. Buyer shall have the right to conduct an audit of Sellers to
determine the accuracy of the accounting for all cash receipts and disbursements
from operations after the Closing Date and for any fees charged by any Seller
for the Transition Services, the cost of which shall be borne by Buyer;
PROVIDED, HOWEVER, that if the results of any such audit show mis-reporting of
cash receipts and disbursements and/or excess charges for fees of more than
$5,000 in the aggregate, then the cost of such audit shall be borne by Sellers
and Sellers shall promptly reimburse Buyer for all overcharges due to
mis-reporting of cash receipts or disbursements and excess charges for fees.
(f) Buyer will provide Sellers with the accounting services
set forth on ANNEX B (the "Accounting Services") for the operation of the
Business up to and including the Closing Date (the "Closing Period"). Buyer
shall provide such Accounting Services in good faith, in a professional and
workmanlike manner and on a basis consistent with the usual standards for the
provision of such Accounting Services or similar services by Buyer. All
employees and representatives of Buyer providing the Accounting Services
hereunder to Sellers shall be deemed for all purposes (including compensation
and employee benefits) to be employees or representatives solely of Buyer and
not to be employees or representatives of any Seller or any of its affiliates or
to be independent contractors thereof. In performing their respective duties
hereunder, all such employees and representatives of Buyer shall be under the
direction, control and supervision of Buyer (and not of any Seller or its
affiliates). Sellers shall reimburse Buyer for its reasonable direct costs of
providing the Accounting Services as reflected in an estimated budget to be
mutually agreed upon by Sellers and Buyer. Buyer shall submit to Sellers for
payment a billing invoice or other statement setting forth the amount of any
fees for the Accounting Services. Such invoice or statement shall be accompanied
by such supporting detail as Sellers may reasonably request with respect to any
of such fees. Payment by Sellers to Buyer in respect of any such invoice or
statement shall be made within 15 days after the date of Sellers' receipt of
such invoice or statement. Sellers shall have the right to conduct an audit of
Buyer to determine the accuracy of the accounting for all cash receipts and
disbursements from operations
on or prior to the Closing Date and for any fees charged by Buyer for the
Accounting Services, the cost of which shall be borne by Sellers; PROVIDED,
HOWEVER, that if the results of any such audit show mis-reporting of cash
receipts and disbursements and/or excess charges for fees of more than $5,000 in
the aggregate, then the cost of such audit shall be borne by Buyer and Buyer
shall promptly reimburse Sellers for all overcharges due to mis-reporting of
cash receipts or disbursements and all excess charges for fees.
(g) During the Transition Period, neither Sellers or their
affiliates nor Buyer or its affiliate shall disparage the others, whether by
action, in writing or orally. Further, after the Closing, neither Sellers nor
their affiliates shall communicate with any customers of the Business, other
than as directed by Buyer and in accordance with this Agreement.
(h) In order to ensure that this Agreement is properly
implemented, Sellers and Buyers will each appoint a person who has the
responsibility of coordinating all necessary contact between the parties during
the term of this Agreement. These individuals shall work closely to ensure that
this Section 8.9 is properly implemented.
8.10. USE OF CUSTOMER DATA. Each Seller agrees that after the
Closing such Seller shall use Customer Data only in connection with the
provision of Transition Services and shall not use any Customer Data in any
manner whatsoever for the benefit of its business (it being understood by the
parties hereto that general advertising (other than in the Chicago Business and
Maryland Business markets (including national advertising in such markets))
shall not be considered a violation of this SECTION 8.10.) Each Seller agrees
that immediately following the completion of the Transition Services, at Buyer's
request, any Customer Data not transferred to Buyer hereunder shall be disposed
of or destroyed by such Seller.
8.11. RELEASE OF SELLERS' OBLIGATIONS. Promptly following the
Closing, Buyer shall use reasonable best efforts to assist in causing each
Seller to be released and discharged in full of the Assumed Liabilities (it
being understood that Buyer shall not be required to pay any amounts in
connection therewith). From and after the Closing, Buyer shall perform each
Assumed Liability.
8.12. SUBSTITUTION OF CERTIFICATE OF DEPOSIT. Promptly
following the Closing, Buyer shall use reasonable best efforts to assist in
causing the return (or to assist Mid-Atlantic in causing the return) to the
account of Mid-Atlantic of that certain certificate of deposit with Crestar Bank
in the amount of approximately $112,000, which certificate of deposit is issued
in the name of Mid-Atlantic and held for the benefit of the landlord of the
Leased Real Property relating to the Maryland Division, such efforts of Buyer to
include, if required, the purchase by Buyer of a letter of credit, certificate
of deposit or the establishment of other security for the benefit of such
landlord in an amount not to exceed $166,000.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall, at the
option of Buyer, be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
9.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
WARRANTIES. There shall have been no material breach by any Seller in the
performance of any of its covenants and agreements herein; each of the
representations and warranties of each Seller contained or referred to herein
shall be true and correct on the Closing Date as though made on the Closing
Date, except for changes therein specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing by Buyer or any
transaction permitted by SECTION 7.4; and there shall have been delivered to
Buyer a certificate to such effect, dated the Closing Date, signed on behalf of
each Seller by the President or any Vice President of such Seller.
9.2. NO CHANGES OR DESTRUCTION OF PROPERTY. Between the date
hereof and the Closing Date, there shall have been (a) no material adverse
change in the Purchased Assets, the Business or the operations, liabilities,
profits, prospects or condition (financial or otherwise) of either Division; (b)
no material adverse federal or state legislative or regulatory change affecting
the Business or its products or services; and (c) no material damage to the
Purchased Assets by fire, flood, casualty, act of God or the public enemy or
other cause, regardless of insurance coverage for such damage; and there shall
have been delivered to Buyer a certificate to such effect, dated the Closing
Date and signed on behalf of each Seller by the President or any Vice President
of such Seller.
9.3. NO RESTRAINT OR LITIGATION. No action, suit,
investigation or proceeding shall have been instituted or threatened to restrain
or prohibit or otherwise challenge the legality or validity of the transactions
contemplated hereby.
9.4. NECESSARY GOVERNMENTAL APPROVALS. The parties shall have
received all approvals and actions of or by all Governmental Bodies which are
necessary to consummate the transactions contemplated hereby, which are either
specified in SCHEDULE 5.3 (except as otherwise contemplated therein) or
otherwise required to be obtained prior to the Closing by applicable
Requirements of Laws or which are necessary to prevent a material adverse change
in the Purchased Assets, the Business or the operations, liabilities, profits,
prospects or condition (financial or otherwise) of each Division.
9.5. NECESSARY CONSENTS. Each Seller shall have received
consents, in form and substance reasonably satisfactory to Buyer, to the
transactions contemplated hereby from the other parties to all contracts,
leases, agreements and permits to which any Seller is a party or by which any
Seller or any of the Purchased Assets is affected and which are specified in
SCHEDULE 9.5 or are otherwise necessary to prevent a material adverse change in
the Purchased Assets, the Business or in the operations, liabilities, profits,
prospects or condition (financial or otherwise) of either Division. If any of
the consents specified in SCHEDULE 9.5 are not obtained prior to the Closing
Date, Buyer shall be entitled to waive the condition set forth in this SECTION
9.5 for purposes of Closing; PROVIDED, HOWEVER, that notwithstanding any such
waiver, Sellers shall nevertheless continue to act diligently to obtain such
consents; and PROVIDED, FURTHER that if such consents have not been obtained on
or prior to the Closing Date, Buyer shall deposit the Indemnity Escrow Amount
into the Indemnity Escrow Account at Closing as provided in SECTION 3.2 which
Indemnity Escrow Amount shall be disbursed in accordance with the Indemnity
Escrow Agreement.
9.6. TITLE INSURANCE. Buyer shall have received with respect
to the Leased Real Property identified in SCHEDULE 5.11 current leasehold
owner's title insurance policy.
9.7. MAJOR STOCKHOLDERS RELEASES. Buyer shall have received
the Major Stockholders Releases, duly executed by each of the Major Stockholders
that is a signatory thereto.
9.8. LIST OF CREDITORS. Buyer shall have received an affidavit
of Parent and Mid-Atlantic (the "Affidavit of Creditors") which shall contain
the names and business addresses of all creditors of Parent or Mid-Atlantic
relating to the Maryland Business and all persons who are known by any Seller to
assert claims against Parent or Mid-Atlantic relating to the Maryland Business
even though such claims may be disputed, showing the amounts due such creditors
or amounts asserted as of the Closing Date.
9.9. FAIRNESS OPINION. The Board of Directors of Sellers shall
have received the Fairness Opinion.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
The obligations of Sellers under this Agreement shall, at the
option of Sellers, be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
10.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
WARRANTIES. There shall have been no material breach by Buyer in the performance
of any of its covenants and agreements herein; each of the representations and
warranties of Buyer contained or referred to in this Agreement shall be true and
correct on the Closing Date as though made on the Closing Date, except for
changes therein specifically permitted by this Agreement or resulting from any
transaction expressly consented to in writing by Sellers or any transaction
contemplated by this Agreement; and there shall have been delivered to Sellers a
certificate to such effect, dated the Closing Date and signed on behalf of Buyer
by the President or any Vice President of Buyer.
10.2. NO RESTRAINT OR LITIGATION. No action, suit or
proceeding by any Governmental Body shall have been instituted or threatened to
restrain, prohibit or otherwise challenge the legality or validity of the
transactions contemplated hereby.
10.3. NECESSARY GOVERNMENTAL APPROVALS. The parties shall have
received all approvals and actions of or by all Governmental Bodies necessary to
consummate the transactions contemplated hereby, which are required to be
obtained prior to the Closing by applicable Requirements of Laws (except as
otherwise contemplated by SCHEDULE 5.3).
ARTICLE XI
INDEMNIFICATION
11.1. INDEMNIFICATION BY SELLERS.
(a) Each Seller jointly and severally agrees to indemnify and
hold harmless each Buyer Group Member from and against any and all Losses and
Expenses incurred by such Buyer Group Member in connection with or arising from:
(i) any breach by any Seller of any of its covenants in this
Agreement or in any Seller Ancillary Agreement;
(ii) any failure of any Seller to perform any of its
obligations in this Agreement or in any Seller Ancillary Agreement;
(iii) any breach of any warranty or the inaccuracy of any
representation of any Seller contained or referred to in this Agreement or any
certificate delivered by or on behalf of any Seller pursuant hereto;
(iv) any failure of any Seller to obtain prior to the Closing
any consent set forth in SCHEDULE 5.3;
(v) the failure of any Seller to comply with any applicable
bulk sales law, except that this clause shall not affect the obligation of Buyer
to pay and discharge the Assumed Liabilities;
(vi) any claim by and third Person that the use of the trade
names or Trademarks of any Seller by any Buyer Group Member in accordance with
SECTION 8.2 infringes the Intellectual Property Rights of such third Person; or
(vii) the failure of any Seller to perform any Excluded
Liability.
(b) The indemnification provided for in this SECTION 11.1
shall terminate as of April 1, 2002 (the "Indemnity Termination Date") (and no
claims shall be made by any Buyer Group Member under this SECTION 11.1
thereafter), except that the indemnification by Sellers shall continue as to:
(i) the obligations and representations of each Seller under
the Instrument of Assignment, the representation and warranties of each
Seller set forth in SECTION 5.17 and the covenants of each Seller set
forth in SECTION 8.4 as to which no time limitation shall apply;
(ii) the representations and warranties set forth in SECTIONS
5.7, 5.18 and 5.23 and the covenants of each Seller set forth in
SECTIONS 8.3, 13.2, 13.6 and 13.13, as to all of which no time
limitation shall apply, subject to any applicable statute of
limitation;
(iii) the covenant set forth in SECTION 8.1, as to which the
indemnification provided for in this SECTION 11.1 shall terminate one
year after the expiration of the noncompetition period provided for
therein; and
(iv) any Loss or Expense of which any Buyer Group Member has
notified Sellers in accordance with the requirements of SECTION 11.3 on
or prior to the date such indemnification would otherwise terminate in
accordance with this SECTION 11.1, as to which the obligation of
Sellers shall continue until the liability of Seller shall have been
determined pursuant to this ARTICLE XI, and Sellers shall have
reimbursed all Buyer Group Members for the full amount of such Loss and
Expense in accordance with this ARTICLE XI.
11.2. INDEMNIFICATION BY BUYER.
(a) Buyer agrees to indemnify and hold harmless each Seller
Group Member from and against any and all Loss and Expense incurred by such
Seller Group Member in connection with or arising from:
(i) any breach by Buyer of any of its covenants or agreements
in this Agreement or in any Buyer Ancillary Agreement;
(ii) any failure by Buyer to perform any of its obligations in
this Agreement or in any Buyer Ancillary Agreement;
(iii) any breach of any warranty or the inaccuracy of any
representation of Buyer contained or referred to in this Agreement or
in any certificate delivered by or on behalf of Buyer pursuant hereto;
or
(iv) the failure of Buyer to perform the Assumed Liabilities.
(b) The indemnification provided for in this SECTION 11.2
shall terminate on the Indemnity Termination Date (and no claims shall be made
by Seller under this SECTION 11.2 thereafter), except that the indemnification
by Buyer shall continue as to:
(i) the covenants of Buyer set forth in SECTIONS 8.3, 13.2,
13.6 and 13.13, as to all of which no time limitation shall apply,
subject to any applicable statute of limitations; and
(ii) any Loss or Expense of which Sellers have notified Buyer
in accordance with the requirements of SECTION 11.3 on or prior to the
date such indemnification would otherwise terminate in accordance with
this SECTION 11.2, as to which the obligation of Buyer shall continue
until the liability of Buyer shall have been determined pursuant to
this ARTICLE XI, and Buyer shall have reimbursed all Seller Group
Members for the full amount of such Loss and Expense in accordance with
this ARTICLE XI.
11.3. NOTICE OF CLAIMS. Any Buyer Group Member or Seller Group
Member (the "Indemnified Party") seeking indemnification hereunder shall give to
the party obligated to provide indemnification to such Indemnified Party (the
"Indemnitor") a notice (a "Claim
Notice") describing in reasonable detail the facts giving rise to any claim for
indemnification hereunder and shall include in such Claim Notice (if then known)
the amount or the method of computation of the amount of such claim, and a
reference to the provision of this Agreement or any other agreement, document or
instrument executed hereunder or in connection herewith upon which such claim is
based; PROVIDED, that a Claim Notice in respect of any action at law or suit in
equity by or against a third Person as to which indemnification will be sought
shall be given promptly after the action or suit is commenced; PROVIDED FURTHER
that failure to give such notice shall not relieve the Indemnitor of its
obligations hereunder except to the extent it shall have been prejudiced by such
failure.
11.4. THIRD PERSON CLAIMS.
(a) Subject to SECTION 11.4(b), the Indemnified Party shall
have the right to conduct and control, through counsel of its choosing, the
defense, compromise or settlement of any third Person claim, action or suit
against such Indemnified Party as to which indemnification will be sought by any
Indemnified Party from any Indemnitor hereunder, and in any such case the
Indemnitor shall cooperate in connection therewith and shall furnish such
records, information and testimony and attend such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably requested by the
Indemnified Party in connection therewith; provided, that the Indemnitor may
participate, through counsel chosen by it and at its own expense, in the defense
of any such claim, action or suit as to which the Indemnified Party has so
elected to conduct and control the defense thereof; and provided, further, that
the Indemnified Party shall not, without the written consent of the Indemnitor
(which written consent shall not be unreasonably withheld), pay, compromise or
settle any such claim, action or suit, except that no such consent shall be
required if, following a written request from the Indemnified Party, the
Indemnitor shall fail, within 14 days after the making of such request, to
acknowledge and agree in writing that, if such claim, action or suit shall be
adversely determined, such Indemnitor has an obligation to provide
indemnification hereunder to such Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit without such consent, provided that in
such event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless such consent is unreasonably withheld.
(b) If any third Person claim, action or suit against any
Indemnified Party is solely for money damages or, where any Seller is the
Indemnitor, will have no continuing effect in any material respect on the
Business or the Purchased Assets, then the Indemnitor shall have the right to
conduct and control, through counsel of its choosing, the defense, compromise or
settlement of any such third Person claim, action or suit against such
Indemnified Party as to which indemnification will be sought by any Indemnified
Party from any Indemnitor hereunder if the Indemnitor has acknowledged and
agreed in writing that, if the same is adversely determined, the Indemnitor has
an obligation to provide indemnification to the Indemnified Party in respect
thereof, and in any such case the Indemnified Party shall cooperate in
connection therewith and shall furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials and appeals
as may be reasonably requested by the Indemnitor in connection therewith;
provided, that the Indemnified Party may participate, through counsel chosen by
it and at its own expense, in the defense of any such claim, action or suit as
to which the Indemnitor has so elected to conduct and control the defense
thereof.
Notwithstanding the foregoing, the Indemnified Party shall have the right to
pay, settle or compromise any such claim, action or suit, provided that in such
event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless the Indemnified Party shall have sought the consent of the
Indemnitor to such payment, settlement or compromise and such consent was
unreasonably withheld, in which event no claim for indemnity therefor hereunder
shall be waived.
11.5. LIMITATIONS OF INDEMNIFICATION. No Indemnifying Party
shall be required to indemnify an Indemnified Party hereunder unless and until
the aggregate amount of Losses and/or Expenses for which the applicable
Indemnitor is otherwise obligated to make payment pursuant to this SECTION 11
exceeds $50,000, whereupon such Indemnitor shall be obligated to pay the entire
aggregate amount of all such Losses and Expenses. The amount of any Losses or
Expenses recoverable by an Indemnified Party under this SECTION 11.5 shall be
calculated net of any insurance proceeds or other third party recoveries
received by such Indemnified Party with respect thereto.
11.6. ADJUSTMENT TO PURCHASE PRICE. Any payment by Buyer or
Sellers under this ARTICLE XI shall be made on an After-Tax Basis, and to the
extent such payment can be properly so characterized under applicable tax law,
shall be treated by the parties as an adjustment to the Purchase Price.
ARTICLE XII
TERMINATION
12.1. TERMINATION. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing Date:
(a) by the mutual consent of Buyer and Parent;
(b) by Buyer in the event of any material breach by any Seller
of any of Seller's agreements, representations or warranties contained herein
and the failure of such Seller to cure such breach within seven days after
receipt of notice from Buyer requesting such breach to be cured; or
(c) by Parent in the event of any material breach by Buyer of
any of Buyer's agreements, representations or warranties contained herein and
the failure of Buyer to cure such breach within seven days after receipt of
notice from Parent requesting such breach to be cured.
12.2. NOTICE OF TERMINATION. Any party desiring to terminate
this Agreement pursuant to SECTION 12.1 shall give notice of such termination to
the other parties to this Agreement.
12.3. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to this ARTICLE XII, all further obligations of the parties under this
Agreement (other than SECTIONS 13.2 and 13.10) shall be terminated without
further liability of any party to the other, PROVIDED that nothing herein shall
relieve any party from liability for its willful breach of this Agreement.
ARTICLE XIII
GENERAL PROVISIONS
13.1. SURVIVAL OF OBLIGATIONS. All representations,
warranties, covenants and obligations contained in this Agreement shall survive
the consummation of the transactions contemplated by this Agreement as provided
herein.
13.2. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees
that it will treat in confidence all documents, materials and other information
which it shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein, the preparation of this Agreement and other related
documents and the provision of Transition Services and Accounting Services, and,
if the transactions contemplated hereby are not consummated, each party will
return to the other party all copies of nonpublic documents and materials which
have been furnished in connection therewith, and, if such transactions are
consummated, Buyer will promptly thereafter return to Parent all copies of
nonpublic documents and materials which have been furnished by any Seller to
Buyer and which do not relate primarily to the Business. Such documents,
materials and information shall not be communicated to any third Person (other
than, in the case of Buyer, to its counsel, accountants, financial advisors or
lenders, and in the case of Sellers, to their counsel, accountants or financial
advisors). No other party shall use any confidential information in any manner
whatsoever except solely for the purpose of evaluating the proposed purchase and
sale of the Purchased Assets; PROVIDED, HOWEVER, that after the Closing Buyer
may use or disclose any confidential information included in the Purchased
Assets or otherwise reasonably related primarily to the Business or the
Purchased Assets. The obligation of each party to treat such documents,
materials and other information in confidence shall not apply to any information
which (i) is or becomes available to such party from a source other than such
party, (ii) is or becomes available to the public other than as a result of
disclosure by such party or its agents, (iii) is required to be disclosed
without protection of confidentiality under applicable law or judicial process,
but only to the extent it must be disclosed, or (iv) such party reasonably deems
necessary to disclose to obtain any of the consents or approvals contemplated
hereby.
13.3. NO PUBLIC ANNOUNCEMENT. None of Buyer nor any Seller
shall, without the approval of the other (which approval shall not be
unreasonably withheld) , make any press release or other public announcement
concerning the transactions contemplated by this Agreement, except as and to the
extent that any such party shall be so obligated by law or the rules of any
stock exchange, in which case the other party shall be advised and the parties
shall use their best efforts to cause a mutually agreeable release or
announcement to be issued; provided that the foregoing shall not preclude
communications or disclosures necessary to implement the provisions of this
Agreement or to comply with the accounting and Securities and Exchange
Commission disclosure obligations.
13.4. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally or when sent by registered or certified mail or by
private courier addressed as follows:
If to Buyer, to:
Peapod, Inc.
0000 Xxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxx xxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Sidley & Austin
Bank Xxx Xxxxx
00 Xxxxx Xxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
If to any Seller, to:
Xxxxxxxxxx.xxx, Inc.
00 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile (000) 000-0000
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
13.5. SUCCESSORS AND ASSIGNS.
(a) The rights of either party under this Agreement shall not
be assignable by such party hereto prior to the Closing without the written
consent of the other; PROVIDED, HOWEVER, that Buyer may assign its rights and
obligations under this Agreement to an Affiliate of Buyer. Following the
Closing, either party may assign any of its rights hereunder, but no such
assignment shall relieve it of its obligations hereunder.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns. The
successors and permitted assigns hereunder shall include without limitation, in
the case of Buyer, any permitted assignee as well
as the successors in interest to such permitted assignee (whether by merger,
liquidation (including successive mergers or liquidations) or otherwise).
Nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any Person other than the parties and successors and
assigns permitted by this SECTION 13.5 any right, remedy or claim under or by
reason of this Agreement.
13.6. ACCESS TO RECORDS AFTER CLOSING.
(a) For a period of six years after the Closing Date, Sellers
and their representatives shall have reasonable access to all of the books and
records of the Divisions transferred to Buyer hereunder to the extent that such
access may reasonably be required by Sellers in connection with matters relating
to or affected by the operations of the Divisions prior to the Closing Date.
Such access shall be afforded by Buyer upon receipt of reasonable advance notice
and during normal business hours. Sellers shall be solely responsible for any
costs or expenses incurred by it pursuant to this SECTION 13.6(A). If Buyer
shall desire to dispose of any of such books and records prior to the expiration
of such six-year period, Buyer shall, prior to such disposition, give Sellers a
reasonable opportunity, at Sellers' expense, to segregate and remove such books
and records as Sellers may select.
(b) For a period of six years after the Closing Date, Buyer
and its representatives shall have reasonable access to all of the books and
records relating to the Business which Sellers or any of their Affiliates may
retain after the Closing Date. Such access shall be afforded by Sellers and
their Affiliates upon receipt of reasonable advance notice and during normal
business hours. Buyer shall be solely responsible for any costs and expenses
incurred by it pursuant to this SECTION 13.6(b). If Sellers or any of their
Affiliates shall desire to dispose of any of such books and records prior to the
expiration of such six-year period, Sellers shall, prior to such disposition,
give Buyer a reasonable opportunity, at Buyer's expense, to segregate and remove
such books and records as Buyer may select.
13.7. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Exhibits and Schedules referred to herein and the documents delivered pursuant
hereto contain the entire understanding of the parties hereto with regard to the
subject matter contained herein or therein, and supersede all prior agreements,
understandings or letters of intent between or among any of the parties hereto,
including the Letter of Understanding. This Agreement shall not be amended,
modified or supplemented except by a written instrument signed by an authorized
representative of each of the parties hereto.
13.8. PARTIAL INVALIDITY. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
13.9. WAIVERS. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof.
Any such waiver shall be validly and sufficiently authorized for the purposes of
this Agreement if, as to any party, it is authorized in writing by an authorized
representative of such party. The failure of any party hereto to enforce at any
time any provision of this Agreement shall not be construed to be a waiver of
such provision, nor in any way to affect the validity of this Agreement or any
part hereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.
13.10. EXPENSES. Each party hereto will pay all costs and
expenses incident to its negotiation and preparation of this Agreement and to
its performance and compliance with all agreements and conditions contained
herein on its part to be performed or complied with, including the fees,
expenses and disbursements of its counsel and accountants.
13.11. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more counterparts, each of which shall be considered an
original instrument, but all of which shall be considered one and the same
agreement, and shall become binding when one or more counterparts have been
signed by each of the parties hereto and delivered to each Seller and Buyer.
13.12. ENFORCEMENT OF AGREEMENT. In the event of an action at
law or in equity between the parties hereto to enforce any of the provisions
hereof, the unsuccessful party to such litigation or proceeding shall pay to the
successful party all costs and expenses, including reasonable attorneys' fees,
incurred therein by such successful party on trial and appeal as adjudged by the
court, and if such successful party or parties shall recover judgment in any
such action or proceeding, such costs, expenses and attorneys' fees may be
included as part of such judgment.
13.13. FURTHER ASSURANCES. From time to time following the
Closing, each Seller shall execute and deliver, or cause to be executed and
delivered, to Buyer such other instruments of conveyance and transfer as Buyer
may reasonably request or as may be otherwise necessary to more effectively
convey and transfer to, and vest in, Buyer and put Buyer in possession of, any
part of the Purchased Assets, and, in the case of licenses, certificates,
approvals, authorizations, agreements, contracts, leases, easements and other
commitments included in the Purchased Assets (a) which cannot be transferred or
assigned effectively without the consent of third parties which consent has not
been obtained prior to the Closing, to cooperate with Buyer at its request in
endeavoring to obtain such consent promptly, and if any such consent is
unobtainable, to use its reasonable best efforts to secure to Buyer the benefits
thereof in some other manner, or (b) which are otherwise not transferable or
assignable, to use its reasonable best efforts jointly with Buyer to secure to
Buyer the benefits thereof in some other manner (including the exercise of the
rights of any Seller thereunder); PROVIDED, HOWEVER, that nothing herein shall
relieve Sellers of their obligations under SECTION 7.3. Notwithstanding anything
in this Agreement to the contrary, this Agreement shall not constitute an
agreement to assign any license, certificate, approval, authorization,
agreement, contract, lease, easement or other commitment included in the
Purchased Assets if an attempted assignment thereof without the consent of a
third party thereto would constitute a breach thereof.
13.14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts of
law provisions) of the State of Illinois.
13.15. TIME IS OF THE ESSENCE. With respect to all dates and
time periods set forth or referred to in this Agreement, time is of the essence.
13.16. SUBMISSION TO JURISDICTION. Sellers and Buyer hereby
irrevocably submit in any suit, action or proceeding arising out of or related
to this Agreement or any of the transactions contemplated hereby or thereby to
the jurisdiction of the United States District Court for the Northern District
of Illinois and the jurisdiction of the Circuit Court of Xxxx County of Illinois
and waive any and all objections to jurisdiction that they may have under the
laws of the State of Illinois or the United States.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed the day and year first above written.
PEAPOD, INC.
By: /s/ Xxxx Xxxx Gelder
----------------------------------------
Name: Xxxx Xxxx Xxxxxx
------------------------
Title: President & CEO
------------------------
XXXXXXXXXX.XXX, INC.
By: /s/ Xxxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxxxx Xxxxxxxx
------------------------
Title: Assistant Secretary
------------------------
BEACON HOME DIRECT, INC.
By: /s/ Xxxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxxxx Xxxxxxxx
------------------------
Title: Assistant Secretary
------------------------
STREAMLINE MID-ATLANTIC, INC.
By: /s/ Xxxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxxxx Xxxxxxxx
------------------------
Title: Assistant Secretary
------------------------
ANNEX A
TRANSITION SERVICES
SYSTEMS SERVICES
Sellers shall provide Buyer with the following services for the Maryland
Business, including but not limited to:
- maintaining, supporting and updating content on the front-end website
- online merchandising
- executing online communication with customers; working with Buyer to
communicate business changes on-line
- executing, with Buyer, an opt-in message ensuring that customers are
notified that they will be joining the Buyer's service and giving Buyer
access to all customer information, order history and previous shopping
lists
- maintaining and supporting warehouse management system and other
related systems for product picking, delivery and returns; downloading
of product and order information; and routing of deliveries
- assisting in balancing customer delivery availability with operational
capacity
- preparing all customer data, and previous order data after January 1,
2000, in a mutually agreeable format to enable transfer of customer
information and previous order information to the Buyer at the
completion of the Transition Period
ACCOUNTING SERVICES
Sellers shall provide Buyer with the following services for the Maryland
Business, including but not limited to:
- payroll services (Buyer will assume these services for wages after
September 30, 2000 when able to do so, prior to the end of the
Transition Period)
- accounts payable services, including processing and invoicing of
accounts payable (Buyer will assume these services when able to do so,
prior to the end of Transition Period)
- billing services for customer orders
- processing of customer payments and related accounts receivable,
including the transfer of such data after January 1, 2000 to the Buyer
at the completion of the Transition Period
- processing of other cash receipts
- purchasing services related to the ordering of products
- preparing monthly income statements
- maintaining all books and records for the Transition Period and
providing such books and records to the Buyer at the end of the
Transition Period
CUSTOMER CARE AND COMMUNICATIONS
Sellers shall provide Buyer with the following services for the Maryland
Business, including but not limited to:
- signing-up customers; provided that Sellers agree not to sign up
any customers for the refrigerator plan
- scheduling returns
- crediting customer accounts
- responding to customer calls and complaints
- documenting responses to customer calls and complaints in a manner
consistent with that performed for Sellers' own customers
- preparing, with Buyer, an opt-in message ensuring that customers
are notified that they will be joining the Buyer's service and
giving Buyer access to all customer information, order history and
previous shopping lists
For a period of one year from the Closing Date for the Chicago Business and for
a period from the end of the Transition Period through one year from the Closing
Date for the Maryland business, Sellers shall provide the following services,
including but not limited to:
- forwarding of customer inquiries or other communications to the
Buyer
- providing a link from Seller's website to Buyer's website for
customers in the Chicago, Illinois MSA and the Washington, D.C.
MSA (for example, if a new customer enters a zip code in either
market they will be redirected to a jump page explaining the
operation of the business, and then linking to Buyer's website)
- forwarding phone calls and messages from customers to the Buyer
MERCHANDISING
Sellers shall provide Buyer with the following services for the Maryland
Business, including but not limited to:
- maintaining product database, including descriptions, pricing
information and product information
- administering promotional programs
ANNEX B
ACCOUNTING SERVICES
Buyer shall provide Sellers with the following accounting services for the
operations of the Business on or prior to the Closing Date (the "Closing
Period"), including but not limited to:
- payroll services
- accounts payable services, including processing and invoicing of
accounts payable
- billing services for customer orders
- processing of customer payments and related accounts receivable
- processing of other cash receipts
- preparing monthly income statements
- maintaining all books and records for the Closing Period and providing
such books and records to Sellers at the end of the Transition Period
